In 2021, AS, an accrual basis corporation, contracted with a nationally prominent artist to paint a mural in the lobby of the new corporate headquarters under construction. The artist’s commission was $180,000, payable on completion of the mural. The artist finished the work and received the $180,000 commission in 2023. AS has a 21 percent marginal tax rate and uses a 7 percent discount rate to compute NPV.

a. Compute AS’s after-tax cost of the commission if it can deduct the $180,000 accrued expense in 2021.

b. Compute AS’s after-tax cost of the commission if the economic performance requirement delays the deduction until 2023.