Author Question: In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2. The builder's ... (Read 65 times)

Ebrown · **on:** Sep 13, 2020

Question 1

Freida is an accrual-basis taxpayer who owns a furniture store. The furniture store had the following sales of inventory:

For tax purposes, Freida should report gross profit for 2016 of
◦ $40,000.
◦ $65,000.
◦ $90,000.
◦ $125,000.

Question 2

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2. The builder's cost is estimated to be $1,800,000. The actual costs year 1 are $900,000 and year 2's actual costs are $1,300,000. Under the completed contract method the gross profit for year 1 is
◦ $0.
◦ $300,000.
◦ $350,000.
◦ $700,000.

IAPPLET · **Reply #1 on:** Sep 13, 2020

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