Answer: The fair market value of the free tour to Costa Rica is a taxable income.
Professor Vanessa Lazlo won the free tour in a draw, where a prize is awarded by chance.
Publication 525 of the IRS defines taxable and non taxable income.
The IRS lists winnings from raffles and lotteries under Other income.
It also declares that the fair market value of winnings from raffles and lotteries are winnings from gambling. Hence the fair market values of non cash prizes are taxable and must be included as income.
Costs incurred prior to the current project are Sunk Costs .
<h3>What are
Sunk Costs?</h3>
sunk cost are those cost that that is been incurred without any recovery.
It can be used in decision making, which is seen as bygone and are not taken into consideration for continuity, hence, they are incurred prior to the current project .
Learn more about Sunk Costs at:
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Answer:
$52,500
Explanation:
Warranty cost are the cost associated with the repair or replacement of a product in case it does not perform as intended after purchase.
It is debited to the warranty expenses account and credited to the warranty liability account.
Total sales for the year - $3,000,000
Warranty estimate basis - 4%
Estimated warranty - 3,000,000 * 4% = $120,000
Warranty cost incurred = $67,500
Balance to be recorded for the year = 120,000 -67,500
$52,500
