A parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller? A) Assets increase by $52,000; owner's equity increases by $52,000. B) Assets increase by $85,000; owner's equity increases by $85,000. C) Assets increase by $137,000; owner's equity increases by $137,000. D) Assets increase by $140,000; owner's equity increases by $140,000. E) None of the above.
A parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. What is the effect of the sale on the accounting equation for the seller? A) Assets increase by $52,000; owner's equity increases by $52,000. B) Assets increase by $85,000; owner's equity increases by $85,000. C) Assets increase by $137,000; owner's equity increases by $137,000. D) Assets increase by $140,000; owner's equity increases by $140,000. E) None of the above.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter4: Gross Income
Section: Chapter Questions
Problem 4BD
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Transcribed Image Text:A parcel of land that was originally purchased for $85,000 is offered for
sale at $150,000, is assessed for tax purposes at $95,000, is
recognized by its purchasers as easily being worth $140,000, and is
sold for $137,000. What is the effect of the sale on the accounting
equation for the seller?
A) Assets increase by $52,000; owner's equity increases by $52,000.
B) Assets increase by $85,000; owner's equity increases by $85,000.
C) Assets increase by $137,000; owner's equity increases by $137,000.
D) Assets increase by $140,000; owner's equity increases by $140,000.
E) None of the above.
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