Explore BrainMass

Explore BrainMass

    No effect on Net Income

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:56 pm ad1c9bdddf
    https://brainmass.com/business/accounting/no-effect-net-income-159252

    Solution Preview

    2) will have no effect on the income statement.
    When a written off account is collected, the debit goes to cash and the ...

    Solution Summary

    The solution explains which alternative would have no effect on net income.

    $2.19

    ADVERTISEMENT