Because of a shortage of working capital the company was forced to sell off some land for $300,000 in February of the current year. The land had been bought in October 1995 at a cost of $180,000. The company only brought to account in its financial statements the difference between the current market value of $220,000 and the proceeds, namely $300,000, as their accounting gain on sale. The company directors come to you as the taxation adviser of the company and wish to know how each of the items mentioned above are to be treated for taxation purposes.
Because of a shortage of working capital the company was forced to sell off some land for $300,000 in February of the current year. The land had been bought in October 1995 at a cost of $180,000. The company only brought to account in its financial statements the difference between the current market value of $220,000 and the proceeds, namely $300,000, as their accounting gain on sale. The company directors come to you as the taxation adviser of the company and wish to know how each of the items mentioned above are to be treated for taxation purposes.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Because of a shortage of
The company directors come to you as the
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