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Tax Drill - Revenue Procedure 2004-34 Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month, and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2022, Bigham sold the following customer contracts: Length of contract 12 months 24 months Determine the income to be recognized in 2022 and 2023. Length of Contract 2022 Income 12 months Total Proceeds $14,000 $24,000 24 months 2023 Income

Tax Drill - Revenue Procedure 2004-34 Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month, and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2022, Bigham sold the following customer contracts: Length of contract 12 months 24 months Determine the income to be recognized in 2022 and 2023. Length of Contract 2022 Income 12 months Total Proceeds $14,000 $24,000 24 months 2023 Income

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Tax Drill - Revenue Procedure 2004-34 Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month, and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2022, Bigham sold the following customer contracts: Length of contract 12 months 24 months Total Proceeds $14,000 $24,000 Determine the income to be recognized in 2022 and 2023. Length of Contract 12 months 24 months 2022 Income 2023 Income
Transcribed Image Text:Tax Drill - Revenue Procedure 2004-34 Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month, and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2022, Bigham sold the following customer contracts: Length of contract 12 months 24 months Total Proceeds $14,000 $24,000 Determine the income to be recognized in 2022 and 2023. Length of Contract 12 months 24 months 2022 Income 2023 Income
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The accrual concept states that the revenues are recognized when earned and the expense is recognized when they are incurred. The accrual concept does not consider when cash is received for the services provided. In the case of accrual basis accounting the revenue in a contract must be recognized every month because the company is providing services to customers every month.

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