Firm M exchanged an old asset with a $11, 500 tax basis and a $29, 000 FMV for a new asset worth $ 22, 500 and $6,500 cash. Required: If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. How would your answers change if the new asset were worth only $ 11,000, and Firm M received $18,000 cash in the exchange?

Firm M exchanged an old asset with a $11, 500 tax basis and a $29, 000 FMV for a new asset worth $ 22, 500 and $6,500 cash. Required: If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. How would your answers change if the new asset were worth only $ 11,000, and Firm M received $18,000 cash in the exchange?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please help me
Question 35 Choose the correct answer from the choices.
Bonita Industries traded machinery with a book value of $1110200 and a fair value of $1820000. It received in exchange from Carla Vista Co. a machine with a fair value of $1638000 and cash of $182000. Carla Vista’s machine has a book value of $1703520. What amount of gain should Bonita recognize on the exchange (assuming lack of commercial substance)? $182000 $709800 $ -0- $70980
An airplane priced at a fair value of $750,000 is acquired in a transaction that has commercial substance by trading in a similar airplane and paying cash for the difference between the trade-in allowance and the price of the new airplane. Required: a. Assuming that the trade-in allowance is $225,000, what is the amount of cash given? b. Assuming that the book value of the airplane traded-in is $175,000, what is the gain or loss on the exchange? Show Your Work:
Metro Corporation traded Building A for Building B. Metro originally purchased Building A for $50,000, and Building A's adjusted basis was $25,000 at the time of the exchange. What is Metro's realized gain or loss, recognized gain or loss, and adjusted basis in Building B in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Input all other amounts as positive values. Leave no answer blank. Enter zero is applicable.) c. The fair market value of Building A is $35,000, and Building B is valued at $40,000. Metro exchanges Building A and $5,000 cash for Building B. Building A and Building B are like-kind property. Description Amount (1) Amount realized from Building B (2) Amount realized from boot (cash) (3) Total amount realized $ (4) Adjusted basis (7) Deferred gain Adjusted basis in Building B
Equipment that cost $1,400,000 and has accumulated depreciation of $600,000 is exchanged for equipment with a fair value of $960,000 and $40,000 cash is paid. The exchange has commercial substance. The gain to be recognized from the exchange is
Coronado Inc. and Wildhorse Co. have an exchange with no commercial substance. The asset given up by Coronado Inc. has a book value of $53000 and a fair value of $88000. The asset given up by Wildhorse Co. has a book value of $118000 and a fair value of $111000. Boot of $23000 is received by Wildhorse Co.What amount should Coronado Inc. record for the asset received? $118000 $76000 $111000 $88000
Jersey Inc. and Texas Co. have an exchange with no commercial substance. The asset given up by Jersey Inc. has a book value of $160,000 and a fair value of $200,000. The asset given up by Texas Co. has a book value of $260,000 and a fair value of $280,000. Boot of $80,000 is received by Texas Co. What amount should Jersey Inc. record for the asset received?
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $520,000 and a fair value of $740,000. Kapono paid $54,000 cash to complete the exchange. The exchange has commercial substance. Required: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 2 and that the exchange lacked commercial substance. Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that…
Cullumber Company traded machinery with a book value of $525000 and a fair value of $1025000. It received in exchange from Marigold Corp. a machine with a fair value of $922500 and cash of $102500. Marigold’s machine has a book value of $973750. What amount of gain should Cullumber recognize on the exchange (assuming lack of commercial substance)? $102500 $50000 $500000 $ -0-
Hinrich Company traded machinery with a book value of $120,000 and a fair value of $200,000. It received in exchange from Noach Company a machine with a fair value of $180,000 and cash of $20,000. Noach's machine has a book value of $190,000. The transaction lacks commercial substance. What amount of gain should Hinrich recognize on the exchange? O $-0- O $8.000 $20,000 O $80,000
In a like - kind exchange, Greyland exchanged investment - use real property (FMV $210,000, adjusted basis $190,000) for a smaller piece of investment - use property (FMV $200,000) plus $10,000. They will report a $10,000 gain on the exchange. What is their basis in the replacement property? $170,000 $180,000 $190,000 $200,000