Question

Greenville Industries uses the accrual basis to account for all sales transactions. Sales for 2018 total $ 600 comma 000. Included in this amount is $ 15 comma 000 in receivables from sales on installment. Installment sales are considered revenue for book​ purposes, but not for tax purposes. Operating expenses total $ 150 comma 000 and are treated the same for book and tax purposes. What is​ Greenville's tax basis in the installment sale​ receivable?

Answer 1

The correct answer to the following question will be "$0".

Step-by-step explanation:

As we know the given expenses and sales are:

• Year 2018 sale = $600
• Operating expenses = $150

Such that the tax base for Greenville throughout the deferred revenue installment sale would be $0 because according to the details given Installment or obligations sales are regarded income mostly for book transactions and not just for taxation purposes.

Therefore the above is the right answer.