Question: Cornish Inc is an accrual basis calendar year taxpayer In

Cornish Inc. is an accrual basis, calendar year taxpayer. In December, a flood damaged one of Cornish’s warehouses, and Cornish contracted with a construction company to repair the damage. The company estimated that the cost of the repairs could range from $20,000 to $100,000, depending on the severity of the damage. The contract provides that the maximum amount that the company will charge is $100,000. On December 19, the company sent Cornish its first progress bill for $7,200, which Cornish paid on January 8. Cornish’s auditors required Cornish to accrue $65,000 of estimated repair expense on its current year financial statements. Compute Cornish’s current year deduction for repairs.

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  • CreatedNovember 03, 2015
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