P and S Corporations have filed consolidated tax returns on a calendar year basis for several years.

Question:

P and S Corporations have filed consolidated tax returns on a calendar year basis for several years. Both corporations use the accrual method of accounting. On January 1 of the current year, S begins renting a warehouse to P for $10,000 per month. P pays S $10,000 on the first day of each month of the current year. How does this transaction affect the group’s consolidated taxable income?