stephanie began her consulting business this year, and on april 1 stephanie received a $9,000 payment for full payment on a three-year service contract (under the contract, stephanie is obligated to provide advisory services for the next three years). stephanie has elected to use the accrual method of accounting for her business. what is the minimum amount of income stephanie should recognize for tax purposes this year if she recognizes $2,250 of income for financial accounting purposes? what is the minimum amount of income stephanie will recognize next year for tax purposes?

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27-10-2022
Business

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stephanie began her consulting business this year, and on april 1 stephanie received a $9,000 payment for full payment on a three-year service contract (under the contract, stephanie is obligated to provide advisory services for the next three years). stephanie has elected to use the accrual method of accounting for her business. what is the minimum amount of income stephanie should recognize for tax purposes this year if she recognizes $2,250 of income for financial accounting purposes? what is the minimum amount of income stephanie will recognize next year for tax purposes?

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baliyansmiriti baliyansmiriti · Answer 1 · 2022-11-01T13:29:49-04:00

Stephanie began her consulting business this year, and on april 1 stephanie received a $9,000 payment for full payment on a three-year service contract (under the contract, Stephanie is obligated to provide advisory services for the next three years).

Stephanie has elected to use the accrual method of accounting for her business. what is the minimum amount of income Stephanie should recognize for tax purposes this year if she recognizes $2,250 of income for financial accounting purposes is $2250.

Total income for three years =$9,000

For one year =$9,000/3

=$3,000

The amount of income should recognize =$3,000*9/12

=$2,250

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