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Mr. Gilly is the PFO of Petro Inc. This year, his compensation package was $765,000....

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Accounting

Mr. Gilly is the PFO of Petro Inc. This year, his compensation package was $765,000. Petro paid him a $637,500 salary during the year and accrued an unfunded liability to pay him the $127,500 balance in the year he retires at age 60. Petro Inc. pays $127,500 deferred compensation to Mr. Gilly in 2025, the year of his retirement.

How much compensation income does Mr. Gilly recognize in 2025?

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What is Petro's 2025 tax deduction for the payment to Mr. Gilly?

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What is the effect of the payment on Petros 2025 book income and deferred taxes? Assume a 21 percent tax rate.

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Required A Required B Required C How much compensation income does Mr. Gilly recognize in 2025? Compensation income

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