22. Jerry has collected baseball cards as a hobby for most of his life. During the currentyear, he acquired twenty-five specially selected cards at a total cost of $29,550. Hesold the cards the next day. The re-sale was arranged prior to Jerry purchasing thecards. Jerry sold the cards for $55,900. What are the income tax consequences ofthe sale of the cards?A. Jerry has a taxable capital gain of $26,350.B. Jerry has a taxable capital gain of $13,175.C. Jerry has business income of $26,350.D. Because the collection was a hobby, the gain does not have to be includedin income.23. Marvin purchased a large piece of land 5 years ago when a highway bypass wasrumoured to have an exit being built nearby. He had planned to subdivide the landinto building lots within 5 years, but has done no work on the land yet. He hasrented the land each summer over the Labour Day weekend for $500. A local non-profit organization holds a huge neighbourhood garage sale on that weekend. Arecent heart attack has convinced Marvin to slow down. As a result, he hasadvertised the land for sale online and an interested buyer is offering to purchase itat a price that would result in a large gain. What would be the character of the gain?A. property income.B. business income.C. a capital gain.D. a taxable capital gain.24. Which of the following statements is NOT correct with respect to business income?A. An income tax based business reserve that is claimed in the current taxationyear, must be added back to income in the following taxation year.B. Bad debts that are deducted in a previous taxation year and recovered in asubsequent taxation year must be added to business income in thatsubsequent year.C. Amounts received in advance for goods to be delivered or services to beprovided in a subsequent taxation year must be included in business incomewhen received.D. As long as some part of any sale proceeds for goods sold or servicesrendered is not collectible until a subsequent taxation year, a reserve foruncollected amounts can be claimed.25. A business may receive advances for goods or services to be delivered or services tobe provided in a subsequent taxation year. How are these advances treated forincome tax purposes?A. included in income when the goods or services are delivered or the servicesprovidedB. included in income within 180 days of the end of the taxation year.C. allocated to income over the period between the time the cash is receivedand the time the goods and services are delivered or services are provided.D. included in income in the taxation year in which the advance is received.

Business income:The income generated during the normal course of business is known as business…

Jerry has collected baseball cards as a hobby for most of his life. During the current year, he acquired twenty-five specially selected cards at a total cost of $29,550. He sold the cards the next day. The re-sale was arranged prior to Jerry purchasing the cards. Jerry sold the cards for $55,900. What are the income tax consequences of the sale of the cards? A. Jerry has a taxable capital gain of $26,350. 2.175

Jerry has collected baseball cards as a hobby for most of his life. During the current year, he acquired twenty-five specially selected cards at a total cost of $29,550. He sold the cards the next day. The re-sale was arranged prior to Jerry purchasing the cards. Jerry sold the cards for $55,900. What are the income tax consequences of the sale of the cards? A. Jerry has a taxable capital gain of $26,350. 2.175

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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