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natita [175]
3 years ago
7

On December 1, 2019, Ral received advance rental of $27,000 from a tenant for a three-year lease commencing January 1, 2020 to c

over rents for the years 2020, 2021, and 2022. In conformity with GAAP, Ral did not include any part of this rental in its income statement for the year ended December 31, 2019. What amount should Ral include in its 2019 taxable income for rent revenue?
Business
1 answer:
adelina 88 [10]3 years ago
8 0

Answer:

Nil

Explanation:

On receipt of the amount, the entries to be posted would be;

Debit cash account   $27,000

Credit deferred revenue  $27,000

Being entries to recognize cash received in advance for rental income.

As such, no rental income was earned in 2019. Amount to be included in Ral's taxable income for rent revenue is nil.

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