Required: Briefly explain whether the $7,000 and the $180,000 receipts constitutes ordinary income' Alan works for a large investment bank called "Big Bank". He also regularly gives a 5 minute update on the day's events in financial markets on a late night TV show. Although the TV show does not pay him for this, Big Bank does give him $150 per appearance, as they believe that his appearance brings positive publicity to Big Bank. Alan earned $7000 from this activity in the past financial year. Recently, Big Bank has been experiencing tough economic conditions, and wishes to save some money. Subsequently, Big Bank gave Alan $180,000 (paid over two $90,000 instalments) in exchange for Alan agreeing to no longer receive annual bonuses that he had been entitled to in his contract. Alan had received bonuses of $50,000 - $100,000 per year for the last 5 years.

Required: Briefly explain whether the $7,000 and the $180,000 receipts constitutes ordinary income' Alan works for a large investment bank called "Big Bank". He also regularly gives a 5 minute update on the day's events in financial markets on a late night TV show. Although the TV show does not pay him for this, Big Bank does give him $150 per appearance, as they believe that his appearance brings positive publicity to Big Bank. Alan earned $7000 from this activity in the past financial year. Recently, Big Bank has been experiencing tough economic conditions, and wishes to save some money. Subsequently, Big Bank gave Alan $180,000 (paid over two $90,000 instalments) in exchange for Alan agreeing to no longer receive annual bonuses that he had been entitled to in his contract. Alan had received bonuses of $50,000 - $100,000 per year for the last 5 years.

Name: RetainRequired: Briefly explain whether the $7,000 and the $180,000 r
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Description: RetainRequired: Briefly explain whether the $7,000 and the $180,000 receiptsconstitutes ordinary incomeAlan works for a large investment bank called "Big Bank". He alsoregularly gives a 5 minute update on the day's events in financial marketson a la

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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