Question

Joanna received $55,800 compensation from her employer, the value of her stock in ABC company appreciated by $12,400 during the year (but she did not sell any of the stock), and she received $34,600 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

Answer 1

Answer:

Her total income recognizable is $90,400

Explanation:

The $55,800 received from her employer and $34,600 received from insurance proceeds are already earned and be recognized . However, $12,400 appreciation in her stock will not be recognized because this can only be earned and recognized only when the stocks are sold.

Hence, it is only $90,400 that will form Joanna's gross income.