Toward the end of 2021, XYZ Company, an investing firm, began selling subscriptions to its economic research pamphlets to its clients. It charges $1,200 a year for a subscription to a monthly update on economic outlooks, legal changes, and undervalued stocks, as determined by the firm. In December 2021, clients paid $300,000 for the annual subscriptions. In preparing its 2021 tax return, XYZ needs to verify the correct treatment for these subscriptions. 1. Where in the Codification would XYZ find the information needed? 2. Describe the required accounting for taxes regarding the subscriptions. Be sure to specify the amount of the effect on XYZ's 2021 taxes payable (and future years' taxes, if relevant) if the enacted tax rate is 21%.

Toward the end of 2021, XYZ Company, an investing firm, began selling subscriptions to its economic research pamphlets to its clients. It charges $1,200 a year for a subscription to a monthly update on economic outlooks, legal changes, and undervalued stocks, as determined by the firm. In December 2021, clients paid $300,000 for the annual subscriptions. In preparing its 2021 tax return, XYZ needs to verify the correct treatment for these subscriptions. 1. Where in the Codification would XYZ find the information needed? 2. Describe the required accounting for taxes regarding the subscriptions. Be sure to specify the amount of the effect on XYZ's 2021 taxes payable (and future years' taxes, if relevant) if the enacted tax rate is 21%.

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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