TAX PAYABLE METHOD Definition

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TAX PAYABLE METHOD is where the tax expense is equal to the provision for taxes payable in a particular period and deferred income tax is not recognized.

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LOAN-IN-PROCESS ACCOUNT (LIP ACCOUNT) serves as a deposit account for construction funds. The buyers down payment is deposited into this account and is used for the initial construction draws. Disbursements of actual loan funds begin once the buyers money is depleted. Interest on the borrowed funds will be billed monthly on the amount withdrawn. Upon completion of the house, the buyer will be asked to furnish a homeowners insurance policy and monies for completing the escrow account. Once final disbursements to the builder are made, monthly payments begin based on amortization of the balance at that time.

ROCC is an acronym for Return On Committed Capital.

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