Hhhh Julia currently is considering the purchase of some land to be held as an investment. Sheand the seller have agreed on a contract under which Julia would pay $1,000 per monthfor 60 months, or $60,000 total. The seller, not in the real estate business, acquired theland several years ago by paying $10,000 in cash. Two alternative interpretations of thistransaction are (1) a price of $51,726 with 6 percent interest and (2) a price of $39,380with 18 percent interest. Which interpretation would you expect each party to prefer?Why?

A capital gain tax is levied when an individual sells off an asset (usually long-term) at a price…

Answered: Julia currently is considering the…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 12DQ

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The Smiths purchase a $600,000 house and must sell their old home inorder to make a 20 percent down payment plus closing costs of $7,000 onthe new house. Currently, they have a mortgage balance of $100,000 ontheir old home, which has been appraised at $300,000. They have beenpre-approved by the lender to qualify for a $480,000 mortgage in the newhome. The lender offers a bridge loan at 10 percent simple interest. Theclosing date on the new house is February 13, and the Smiths sell their oldhome on May 15.a. How much cash must the Smiths put down on their new house?b. How much equity do the Smiths have in their old house? c. How much must they borrow if they take a bridge loan?d. What is the dollar amount of interest paid on the bridge loan?
On October 1, 2024, a company purchased a piece of land by agreeing to pay the seller $450,000 in two years. If the company had borrowed the money from a bank to pay the seller immediately, management estimates the bank would have required interest of 9% For what amount should the company record the land on the date of purchase (rounded to the nearest dollar)? (PV of $1. and PVA of $1) Multiple Choice O O $450,000 $369.000 $412,844 $378,756
Sanchez Development Company uses the installment sales method to account for some of its installment sales.On October 1, 2018, Sanchez sold a parcel of land to the Kreuze Corporation for $4 million. This amount wasnot considered significant relative to Sanchez’s other sales during 2018. The land had cost Sanchez $1.8 millionto acquire and develop. Terms of the sale required a down payment of $800,000 and four annual payments of$800,000 plus interest at an appropriate interest rate, with payments due on each October 1 beginning in 2019.Kreuze paid the down payment, but on October 1, 2019, defaulted on the remainder of the contract. Sanchezrepossessed the land. On the date of repossession the land had a fair value of $1.3 million.Required:Prepare the necessary entries for Sanchez to record the sale, receipt of the down payment, and the default andrepossession applying the installment sales method. Ignore interest charges.On April 1, 2018, the Apex Corporation sold a parcel of…
May 2018, John purchased two hectares of land for $250,000 on which he planned to build a block of units but unfortunately he ran into financial difficulty. On 1 July 2020 he subdivided the land into two blocks and on 2 June 2021 he sold one block for $160,000 with settlement taking place on 5 July 2021. The market value of the remaining block was $240,000. The associated costs were as follows: Stamp duty on purchase Legal fees on purchase Subdivision costs Legal fees on sale Commission on sale $7,200 $1,400 $15,000 $1,600 $6,300 Required With reference to relevant legal authority, calculate any capital gain or loss on sale of the block to John in the year ended 30 June 2021?
Brian acquired a rental house in 2004 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2020, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale. Calculate his taxable gain under the installment method for the year of sale of the rental house. In your computations, round any division to two decimal places. Gain reportable in 2020 is $fill in the blank 1.
Sebastian purchases two pieces of equipment for $100,000. Appraisals of the equipment indicate that the fair market value of the first piece of equipment is $72,000 and that of the second piece of equipment is $108,000. What is Sebastian's basis in these two assets? Do not round your interim calculations. If required, round your final answers to the nearest dollar. Sebastian's basis for the first piece of equipment is $____ and $_______ for the second piece of equipment.
(Multiple Choice Question) Vanessa recently paid $200,000 cash to purchase both a building and equipment. The fair market value of the building is $180,000, and the fair market value of the equipment is $40,000. When recording this purchase, Vanessa should 1. None of the answers are correct 2. Credit Cash for $200,000 and Credit Mortgage Payable for $20,000 3. Debit Building for $198,000 and Equipment for $44,000 4. Debit Building for $180,000 and Equipment for $40,000 5. Debit Building for $163,636.36 and Equipment for $36,363.64
A transfers land to Newco in exchange for 100% of Newco's stock. The land has a basis of $50, FMV of $100 and is subject to a mortgage of $40. A) What are the consequences to each of the parties? B) Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer C) Suppose instead that the mortgage was for $60. Suppose further that this mortgage was incurred on the purchase of the property many years ago. Would this change your answer? D) Same as (c) except that A also transfers accounts payable of $10. A is a cash basis taxpayer. How would this change your answer?
6 years ago, your company purchased a lot of land for $769203 . You received an offer to purchase the land for $1131668. If you sell it at this price, what is the implied return?
Maud exchanges a rental house at the beach with an adjusted basis of $225,000 and a fair market value of $200,000 for a rental house at the mountains with a fair market value of $180,000 and cash of $20,000. What is the recognized gain or loss? a. ($20,000) b. ($25,000) c. None of these d. $20,000 e. $0
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $33,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is Oa. $4,417 Ob. $7,572 Oc. $9,465 Od. $6,310 Previous Next 7:36 PM 12/13/2020 CP DELL
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $34,000, less a 8% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $9,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a.$10,464 b.$13,080 c.$6,104 d.$8,720

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