XYZ, Inc. is an accrual basis taxpayer with a calendar year end. XYZ received $72,000 cash on August 1, Year 1 from a tenant for a 24-month lease on a warehouse owned by XYZ. How much rental revenue from this transaction will XYZ recognize on its Year 1 tax return?   How much rental revenue will XYZ recognize from this transaction on its income statement for Year 1 prepared in accordance with GAAP?   How much rental revenue from this transaction will XYZ recognize on its Year 2 tax return?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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XYZ, Inc. is an accrual basis taxpayer with a calendar year end. XYZ received $72,000 cash on August 1, Year 1 from a tenant for a 24-month lease on a warehouse owned by XYZ.

How much rental revenue from this transaction will XYZ recognize on its Year 1 tax return?  
How much rental revenue will XYZ recognize from this transaction on its income statement for Year 1 prepared in accordance with GAAP?  
How much rental revenue from this transaction will XYZ recognize on its Year 2 tax return?  
How much rental revenue will XYZ recognize from this transaction on its income statement for Year 2 prepared in accordance with GAAP?  
Is the Year 1 book-to-tax difference favorable or unfavorable?
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