No effect on Net Income
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The occurrence which most likely would have no effect on 2007 net income (assuming that all amounts involved) are material is the:
1) sale in 2007 of an office building contributed by a stockholder in 1973
2) collection in 2007 of a receivable from a customer whose account was written off in 2006 by a charge to the allowance account.
3) settlement based on litigation in 2007 of previously unrecognized damages from a serious accident which occurred in 2005.
4) worthlessness determined in 2007 of stock purchased on a speculative basis in 2003.
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The solution explains which alternative would have no effect on net income.
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2) will have no effect on the income statement.
When a written off account is collected, the debit goes to cash and the ...
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