Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash. 1) Suppose instead the land is subject to a mortgage of $3,000 and Joe receives$12,000 in cash and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so how much is it? 2) Suppose Joe instead received a piece of jewelry worth $12,000 and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so, how much is it? note: if you can't answer both, please answer question number 2
Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash. 1) Suppose instead the land is subject to a mortgage of $3,000 and Joe receives$12,000 in cash and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so how much is it? 2) Suppose Joe instead received a piece of jewelry worth $12,000 and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so, how much is it? note: if you can't answer both, please answer question number 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash.
1) Suppose instead the land is subject to a mortgage of $3,000 and Joe receives$12,000 in cash and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so how much is it?
2) Suppose Joe instead received a piece of jewelry worth $12,000 and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so, how much is it?
note: if you can't answer both, please answer question number 2
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