Jefferson Millinery Incorporated (JMI) decided to liquidate its wholly owned subsidiary, 8 Miles High Incorporated (8MH). 8MH had thefollowing tax accounting balance sheet:DescriptionCashBuildingLandTotalFMV$ 200,00050,000150,000$ 400,000Required ATax Basis$ 200,00010,00090,000$ 300,000Required:a. What amount of gain or loss does 8MH recognize in the complete liquidation?b. What amount of gain or loss does JMI recognize in the complete liquidation?c. What is JMI's tax basis in the building and land after the complete liquidation?Complete this question by entering your answers in the tabs below.Tax basisRequired B Required CAppreciation40,00060,000$ 100,000What is JMI's adjusted tax basis in the building and land after the complete liquidation?Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.BuildingLand

Liquidation is a process that is undertaken to close down all the operations of a company by selling…

Answered: Jefferson Millinery Incorporated (JMI)…

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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Action, Inc. acquired the following assets and assumed the related liabilities of Slacker Corp. in a transaction completed on February 16, 2023: Accounts receivable, net Inventories Property, plant & equipment Non-amortizable intangible assets Carrying value for Slacker Current liabilities Noncurrent liabilities $ 11,000 $ 50,000 $ 100,000 $ 200,000 Fair Value $ 10,000 $ 50,000 $ 150,000 $ 225,000 $ (40,000) $(200,000) $ (40,000) $(200,000) Action paid $205,000 in cash for all of the above from Slacker. a) Determine if Action must record any goodwill. Show any calculations. b) Record the acquisition in Action's general journal on Feb. 16, 2023. Show: any calculations. c) Prepare any adjusting entry for amortization required as of the fiscal year end, December 31, 2023. If no amortization is required, explain why.
[The following information applies to the questions displayed below.] DLW Corporation acquired and placed in service the following assets during the year: Asset Computer equipment Furniture Commercial building Assuming DLW does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) a. What is DLW's year 1 cost recovery for each asset? Asset Date Acquired 2/26 2/26 12/20 Computer equipment Furniture Commercial building Total Year 1 Cost Recovery $ Cost Basis $ 19,500 $ 18,000 $ 341,000 3,900 2,572 9,050 15,522
On January 1, 2022, Paulson Corporation purchased 65% of the outstanding common stock of Sun Company, which became a subsidiary of Paulson. No goodwill was reported on this acquisition. Differences between book value and fair value of the net identifiable assets of Sun Company on January 1, 2022, were limited to the following: Book value $ 19,000 Inventories (FIFO) Building (net) [remaining life: 5 years; straight-line depreciation; no salvage value] | 45,000 40,000 Sun's cost of goods sold was $38,000 in 2022. Sun reported an income of 20,000 in 2023. The noncontrolling interest in net income for the year ended December 31, 2023 (second year after business combination) was a. $7,350 b. $7,175 C. $6,825 d. $6,650 Fair value $ 18,500
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
Sontag Corporation’s net assets have fair values as described below. Fair Value Current assets $250,000 Land 800,000 Buildings and equipment 1,000,000 Loans payable (300,000) The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, not previously reported on Sontag’s books, also are recognized as acquired assets. Required a. Prepare a schedule to calculate the gain on acquisition. Use a negative sign with any answer that reduces the fair value of net assets (left column only). Price paid Answer Fair value of identifiable net assets: Current assets 250,000 Land Answer Buildings and equipment Answer Identifiable intangibles Answer Loans payable Answer Answer Gain on acquisition Answer
The Walston Company is to be liquidated. It has the following liabilities: Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation The company has the following assets: $ 7,600 136,000 93,000 14,000 78,000 28,000 Book Value Fair Value Current assets $ 88,000 Land 108,000 Buildings and equipment 108,000 $ 43,000 98,000 132,000 Required: How much money will the holders of the notes payable collect following liquidation? Total amount collected
Copper Industries (a sole proprietorship) sold three § 1231 assets during 2019. Data on these property dispositions are as follows: a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset.b. Assuming that Copper has $6,000 nonrecaptured net § 1231 losses from prior years, analyze these transactions and determine the amount (if any) that will be treated as a long-term capital gain.
On January 1, 20X1, P sells an equipment with P20,000 book value to its subsidiary S for P30,000. S intends to use the equipment for 4 years. On December 31, 20x2, S sells the equipment to an outside party for P14,000. What amount of gain or (loss) for sale of equipment is reported on the consolidated financial statements? A. Gain 14,000 B. Loss 6,000 C. Loss 1,000 D. Gain 4,000
[The following information applies to the questions displayed below.) 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? Note: Loss amounts should be indicated by a minus sign. Input all other amounts as positive values. Leave no answers blank. Enter zero is applicable. d. The fair market value of Building A is $45,000, and Metro trades Building A for Building B valued at $40,000 and $5,000 cash. Building A and Building B are like kind property. Description (1) Amount realized from Building B (2) Amount realized from boot (cash). (3) Total amount realized (4) Adjusted basis (5) Gain realized (6) Gain recognized (7) Deferred gain Adjusted basis in Building Br Amount S $ $ 40,000 5,000 45.000
Aqua Corporation purchases nonresidential real property on May 8, 2020, for S1, 630, 000. Straight - line cost recovery is taken in the amount of $163, 000 before the property is sold on November 27, 2023, for S2, 445,000.a. Compute the amount of Aqua's recognized gain on the sale of the realty.b. Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture (ordinary income due to § 291). § 1231 gain:§ 1250 recapture (ordinary income due to §
Ma2. On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Incorporated, for $420 million. The fair value of Harman's identifiable tangible and intangible assets totaled $512 million, and the fair value of liabilities assumed by Pesky was $150 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2024. Management has provided the following information: Fair value of Harman, Incorporated $ 400 million Fair value of Harman’s net assets (excluding goodwill) 370 million Book value of Harman’s net assets (including goodwill) 410 million Required: Determine the amount of goodwill that resulted from the Harman acquisition. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2024, if any. If an impairment loss is required, prepare the journal entry to record the loss
Firm OCS sold business equipment with a $23,000 initial cost basis and $10,015accumulated tax depreciation. In each of the following cases, compute OCS’srecaptured ordinary income and Section 1231 gain or loss on the sale.Required:a. Amount realized was $10,600.b. Amount realized was $13,600.c. Amount realized was $18,100.d. Amount realized was $26,100

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