【正文】 the allevents requirement, a taxpayer would be permitted to match revenue from a sale with the estimated future costs of servicing goods under a warranty. ANS: F Such an accrual would violate both the allevents and economic performance requirements. PTS: 1 DIF: 1 REF: p. 1613 | p. 1614 OBJ: 2 NAT: AICPA FNReporting | AACSB Analytic MSC: 2 min 19. A C corporation provides office janitorial services to various businesses. The corporation has average annual gross receipts of $2,500,000. The corporation can use the cash method of accounting. ANS: T The C Corporation is providing services, and inventories are not an ine producing factor. Furthermore, the corporation’s average annual gross receipts are less than $5 million. Therefore, the corporation can use the cash method. PTS: 1 DIF: 1 REF: p. 1612 OBJ: 2 NAT: AICPA FNReporting | AACSB Analytic MSC: 2 min 20. Franklin Company began business in 2020 and has consistently used the cash method to report ine from the sale of inventory in ine tax returns filed for 2020 through 2020. As a result of an audit by the IRS, Franklin was required to change to the accrual method of accounting beginning with 2020. The accounts receivable and inventory on hand at the end of 2020 are treated as a positive adjustment to ine and the accounts payable for inventory at the end of 2020 is a negative adjustment to ine. These adjustments result from changing accounting methods and must be included in the 2020 taxable ine. ANS: T The accounts receivable balance and inventory at the end of 2020 are positive 167。 481 adjustment Unchanged 21 22 Installment method: recognized gain Unchanged 22 23 Installment method: recovery of capital Unchanged 23 24 Installment method: interest on deferred taxes New 25 Capitalization of interest Unchanged 25 162 2020 Comprehensive Volume/Test Bank Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 26 Percentage of pletion method versus pleted Unchanged 26 contract method: eligibility 27 Percentage of pletion method: de minimis rule Unchanged 27 MULTIPLE CHOICE 1 Tax year: 5253 weeks Unchanged 1 2 Tax year: partnership Unchanged 2 3 Tax year: partnership and least aggregate deferral Unchanged 3 4 Tax year: entity form New 5 Tax year: selection Unchanged 5 6 Tax year: personal service corporation Unchanged 6 7 Tax year: annualization Unchanged 7 8 Restoration of amounts received under a Unchanged 8 claim of right 9 Accrual method: who must use? New 10 Accounting method: required method Unchanged 10 11 Accounting method: required method Unchanged 12 Accounting method: required method Unchanged 12 13 Accounting method: farming Unchanged 13 14 Accrual method: allevents test Unchanged 14 15 Accrual method: allevents test and economic New performance test 16 Accrual basis: economic performance and all events Unchanged 16 17 Economic performance: recurring items New 18 Economic performance: matching Unchanged 18 19 Economic performance and all events tests Unchanged 19 20 Accrual method: reserves New 21 Accounting method: change New 22 Accounting method: change Unchanged 22 23 Accounting method: change Unchanged 23 24 Accounting method: change Unchanged 24 25 Accounting method: change Modified 25 26 Installment method: eligibility Unchanged 26 27 Installment method: eligibility Unchanged 27 28 Installment method: eligibility Unchanged 28 29 Installment method: contract price and depreciation New recapture 30 Installment method: depreciation recapture Unchanged 30 31 Installment method: calculations Unchanged 31 32 Installment method: calculations Unchanged 32 33 Installment method: calculations Modified 33 34 Installment method: calculations Unchanged 34 35 Installment method: calculations Unchanged 35 36 Installment method: calculations Unchanged 36 37 Installment method: calculations Unchanged 37 38 Installment method: imputed interest New Status: Q/P Question/ Present in Prior Accounting Periods and Methods 163 Problem Topic Edition Edition 39 Installment method: imputed interest Unchanged 39 40 Installment method: related parties Unchanged 40 41 Installment method: related parties Unchanged 41 42 Installment method: related parties Unchanged 42 43 Installment method: related parties Unchanged 43 44 Installment method: disposition of installment Unchanged 44 obligations 45 Installment method: disposition of installment New obligations 46 Installment method: interest on deferred taxes Unchanged 46 47 Longterm contracts: pleted contract method Unchanged 47 48 Percentage of pletion method Unchanged 48 49 Percentage of pletion method and lookback Unchanged 49 50 Percentage of pletion method and lookback Modified 50 PROBLEMS 1 Tax year: personal service corporation Unchanged 1 2 Claim of right Unchanged 2 3 Installment method: disposition of installment Unchanged 3 obligations 4 Change in accounting period Unchanged 4 5 Installment method Unchanged 5 ESSAY 1 Longterm contracts Unchanged 1 2 Change in accounting method Unchanged 2 3 Installment sales: interest versus principal Unchanged 3 4 Tax benefit rule and 167。 481 adjustment New 21 Change in accounting method: 167。 G Partnership must use September 30th as its tax year, unless it has a business purpose for using a different tax year. ANS: T With a year ending September 30th, the aggregate deferral months will be (3 ? .50). That is, Green Corporation will defer for three months its share of partnership ine. With a calendar year, the aggregate deferral months will be (9 ? .5). Red Corporation will defer for 9 months its sh