10
Eagle recorded the following amounts of customer deposits in
its liability account:
Tax year ending Amount in liability account
July 31, 1989 $1,774,497
July 28, 1990 1,330,830
Dec. 29, 1990 1,505,102
Dec. 28, 1991 1,503,403
Jan. 2, 1993 1,517,037
For the years ending December 29, 1990, and December 28,
1991,4 Eagle included in income (i) the purchase price (including
deposits) of houses delivered that year; and (ii) the percentage
of unapplied deposits on hand at the end of that year which,
based on the 1990 study, Eagle would not apply to a house
purchase within 4 years. For those years, Eagle reported the
amount it paid to Timberline as cost of goods sold. Eagle
recorded customer deposits which it had not included in income as
a liability on its balance sheets and tax returns.
3(...continued)
when it applied them to a house purchase within 4 years. Eagle
reported customer deposits not included in income as a liability
on its tax returns.
4 We will sometimes refer to Eagle's tax year ending Dec.
29, 1990, as its 1990 tax year, year ending Dec. 28, 1991, as its
1991 tax year, and year ending Jan. 2, 1993, as its 1992 tax
year.
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