In year 0, Patrice purchased a machine to use in its business for $112,000. In year 3, Patrice sold the machine for $84,000. Between the date of the purchase and the date of the sale, Patrice depreciated the machine by $64,000. Show all the steps in answering the following questions. What is the amount and character of the gain or loss Patrice will recognize on the sale, assuming that it is a partnership?What is the amount and character of the gain or loss Patrice will recognize on the sale, assuming that it is a corporation, and the sale proceeds were increased to $120,000?

Cost of machine= $112,000 Depreciation = $64,000 Book value of machine at Year 3 = $112,000 –…

Answered: In year 0, Patrice purchased a machine…

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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In year 0, Patrice purchased a machine to use in its business for $112,000. In year 3, Patrice sold the machine for $84,000. Between the date of the purchase and the date of the sale, Patrice depreciated the machine by $64,000. Show all the steps in answering the following questions.

1. What is the amount and character of the gain or loss Patrice will recognize on the sale, assuming that it is a partnership?

1. What is the amount and character of the gain or loss Patrice will recognize on the sale, assuming that it is a corporation, and the sale proceeds were increased to $120,000?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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