Boise Corporation has gross receipts according to the following schedule: Year 1 $23 million Year 2...
Boise Corporation has gross receipts according to the following schedule:
Year 1 $23 million
Year 2 $22 million
Year 3 $25 million
Year 4 $27 million
Year 5 $28 million
Year 6 $27 million
If Boise began business as a cash-method corporation in Year 1, in which year would it first have been required to use the accrual method?
Multiple Choice
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None of the choices are correct.
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Year 3
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Year 4
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Year 6
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Year 5
Homework Answers
Answer : Year 6
Explanation : As per IRS (U.S. Code § 448) , corporation requires to use the accrual method from the year when average gross receipts of preceding three taxable years exceeds $25 million.
In the given question average gross receipts of preceding three taxable years (ie Year 3 , 4 & 5) of Year 6 is $26.67 million [(25 +27 + 28) / 3] . thus Boise Corporation required to use the accrual method from Year 6.
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Boise Corporation has gross receipts according to the following
schedule:
Year 1 $23 million
Year 2...
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