Evan Corporation provided consulting services for Kensington Company in 2015. Ev

Question

Evan Corporation provided consulting services for Kensington Company in 2015. Evan incurred costs of $120,000 associated with the consulting and billed Kensington $180,000. Evan paid $80,000 of it's costs in 2015 and the remaining $40,000 in 2016. Evan received $90,000 of it's billing in 2015. Kensington paid the remaining $90,000 in 2016. Evan reports on the accrual basis of accounting. How much is Evan's 2015 and 2016 profit related to the Kensington consulting? Evan Corporation provided consulting services for Kensington Company in 2015. Evan incurred costs of $120,000 associated with the consulting and billed Kensington $180,000. Evan paid $80,000 of it's costs in 2015 and the remaining $40,000 in 2016. Evan received $90,000 of it's billing in 2015. Kensington paid the remaining $90,000 in 2016. Evan reports on the accrual basis of accounting. How much is Evan's 2015 and 2016 profit related to the Kensington consulting?

Explanation / Answer

Under the accrual basis of accounting, revenues and expenses are recognized when they are provided or incurred irrespective of actual cash received or paid. Year Profit 2015 60000 =180000-120000 2016 0

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