Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part oftheir discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's taxaccounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero ifapplicable. Negative amounts should be indicated by a minus sign.)Ad justed TaxBasis$ 6,0009,00056,500139,000$ 210,500PMVAppreciationCashReceivablesBuilding$ 6,0009,000113,000239,000६ 367,00056,500100,000$ 156,500LandTotalPayablesMortgage$ 12,000132,000$ 144,000$ 12,000132,000$144,000Total* The mortgage is attached to the building and land.Ernesto was asking for $493,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales pricewas an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will berecorded as goodwill.Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $493,000.b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a stock sale to Amy and Brian?Gan or loss recognized

A Recognized gain occurs when an investment or object is sold for a higher price than when it was…

Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Adjusted Tax Basis $ 6,000 9,000 56,500 139,000 PMV Appreciation Cash $ 6,000 Receivables 9,000 Building Land 113,000 239,000 $ 367,000 56,500 100,000 $ 156,500 Total $ 210,500 Payablen Mortgage $ 12,000 132,000 $ 144,000 $ 12,000 132,000 $ 144,000 Total * The mortgage is attached to the building and land. Ernesto was asking for $493,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will be recorded as goodwill. Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $493,000. at amount of gain or loss does Ernesto recognize if the transaction is structured as a stock sale to Amy and Brian?

Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Adjusted Tax Basis $ 6,000 9,000 56,500 139,000 PMV Appreciation Cash $ 6,000 Receivables 9,000 Building Land 113,000 239,000 $ 367,000 56,500 100,000 $ 156,500 Total $ 210,500 Payablen Mortgage $ 12,000 132,000 $ 144,000 $ 12,000 132,000 $ 144,000 Total * The mortgage is attached to the building and land. Ernesto was asking for $493,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will be recorded as goodwill. Assume Ernesto agrees to sell his stock in BLI to Amy and Brian for $493,000. at amount of gain or loss does Ernesto recognize if the transaction is structured as a stock sale to Amy and Brian?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1.(3)
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