Firm M exchanged an old asset with a $16,600 tax basis and a $39,000 FMV for a new asset worth $27,500 and $11,500 cash. Required: a. If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. b. How would your answers change if the new asset were worth only $16,000, and Firm M received $23,000 cash in the exchang Complete this question by entering your answers in the tabs below. Required A Required B If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. Amount Realized gain Recognized gain Tax basis

Firm M exchanged an old asset with a $16,600 tax basis and a $39,000 FMV for a new asset worth $27,500 and $11,500 cash. Required: a. If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. b. How would your answers change if the new asset were worth only $16,000, and Firm M received $23,000 cash in the exchang Complete this question by entering your answers in the tabs below. Required A Required B If the exchange is nontaxable, compute Firm M's realized and recognized gain and tax basis in the new asset. Amount Realized gain Recognized gain Tax basis

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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Cullumber Company traded machinery with a book value of $490000 and a fair value of $1060000. It received in exchange from Vaughn Manufacturing a machine with a fair value of $954000 and cash of $106000. Vaughn’s machine has a book value of $1007000. What amount of gain should Cullumber recognize on the exchange (assuming lack of commercial substance)? $106000 $57000 $570000 $ -0-
Tesco Incorporated and WW Company exchanged like-kind assets. Tesco's asset had an $82,000 FMV and $55,900 adjusted tax basis, and WW's asset had an $85,500 FMV and a $27,200 adjusted tax basis. Tesco paid $8,500 cash to MW as part of the exchange. Calculate a) WW's and Tesco's realized and recognized gain b) WW's and Tesco's basis for newly acquired asset
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Ayayai Automotive is looking to expand its operations and has approached Dynatech Garage to acquire its business. Dynatech has agreed to sell if Ayayai assumes the mortgage on Dynatech's building as part of the sale. The fair value of Dynatech's identifiable assets and identifiable liabilities are: Inventory: 149000. Buildings: 949000. Land: 349000. Mortage payable (274000). Net identifiable assets: 1,173,000. Assuming Ayayai purchases the business for $Record the journal entry for the purchase by Ayayai Automotive. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles Debit Credit 1,324,000
! Required information [The following information applies to the questions displayed below.] Hart, an individual, bought an asset for $500,000 and has claimed $100,000 of depreciation deductions against the asset Hart has a marginal tax rate of 32 percent. Answer the questions presented in the following alternative scenarios (assume Hart had no property transactions other than those described in the problem): Note: Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answers blank. Enter zero if applicable. Required: d1. What are the amount and character of Hart's recognized gain or loss if the asset is a nonresidential building sold for $450,000? d2. What effect does the sale have on Hart's tax liability for the year? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required d1 Required d2 What effect does the sale have on Hart's tax liability for the year? Tax liability…
1. A special manufacturing and handling device was purchased by Alfonso Manufacturing for $200,000 and is depreciated over MACRS. CFBT is estimated to amount to $800,000 for the first 2 years followed by $600,000 thereafter until the asset is retained. The effective tax rate, Te is 35% and interest is 10% per year. In present worth dollars determine the CFAT and determine if it was a viable purchase. (Note answer must be in a tabular format)
Business K exchanged an old asset (FMV $95,000) for a new asset (FMV $95,000). Business K's tax basis in the old asset was $113,000. Required: a. Compute Business K's realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction. b. Compute Business K's realized loss, recognized loss, and tax basis in the new asset, assuming the exchange was a nontaxable transaction. c. Six months after the exchange, Business K sold the new asset for $103,000 cash. How much gain or loss does Business K recognize if the exchange was taxable? How much gain or loss if the exchange was nontaxable? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute Business K's realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction. Note: Losses should be indicated with a minus sign. Realized loss Recognized loss Tax basis Amount
The Bronco Corporation exchanged land for equipment. The land had a book value of $136,000 and a fair value of $182,000. Bronco paid the owner of the equipment $26,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the fair value of the equipment? Fair value
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $31,000 and $32,600 (original cost of $37,000 less accumulated depreciation of $4,400), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $9,000 in cash from China Inn. At what amount did Midwest Chicken record the equipment? How much gain or loss did Midwest Chicken recognize on the exchange?
Alamos Co. exchanged equipment and $17,000 cash for similar equipment. The book value and the fair value of the old equipment were $80,700 and $90,700, respectively. Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
! Required information [The following information applies to the questions displayed below.] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $14,500 (original cost of $33,000 less accumulated depreciation of $18,500) and a fair value of $9,500. Kapono paid $25,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $525,000 and a fair value of $750,000. Kapono paid $55,000 cash to complete the exchange. The exchange has commercial substance. Required: 1.What is the amount of gain or loss that Kapono would recognize on the exchange of the tractor? 2. Assume the fair value of the old tractor is $19,000 instead of $9,50O. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new tractor?
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