Pratt Corporation uses the accrual method of accounting and has transactions with related parties who use the cash method. At Pratts year-end, it has an outstanding accrual owed to one of these parties. Which of the following statements is true?

1. This is not actually possible as all related parties are required to use the same method of accounting

2. Pratt cannot claim any deductions with respect to the related party transactions

3. Pratt can change to the cash method to match the related parties and take the accrued deduction on its tax return

4. Pratt can claim a deduction only when the related party claims the amount as taxable income