Need help with this question Mann, Inc., which owes Doran Co. $800,000 in notes payable withaccrued interest of $72,000, is in financial difficulty. To settle thedebt, Doran agrees to accept from Mann equipment with a fairvalue of $760,000, an original cost of $1,120,000, and accumulateddepreciation of $260,000.(a) Compute the gain or loss to Mann on the settlement of the debt.(b) Compute the gain or loss to Mann on the transfer of theequipment.(c) Prepare the journal entry on Mann's books to record thesettlement of this debt.(d) Prepare the journal entry on Doran's books to record thesettlement of the receivable.

(a) Compute the gain or loss to Mann on the settlement of the debt. Calculation:The total carrying…

Answered: Mann, Inc., which owes Doran Co.…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges

Section: Chapter Questions

Problem 35P

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Dial Co. and Safeguard Inc. engage in an exchange of nonmonetary assets that LACKS commercial substance. Dial gives up an asset with a book value of $20,000 and a fair market value of $19,000. Safeguard gives up an asset with a book value of $12,000 and a fair market value of $15,000. Safeguard also paid $4,000 cash boot. What amount should SAFEGUARD record for the asset received and for the gain or loss? O $16,000 and $3,000 gain O $16,000 and $0 gain/loss O $15,000 and $0 gain/loss O $19,000 and $3,000 gain
Compute the gain or loss on the transfer of machinery
Grabrille Inc. and Lucy Company have an exchange with no commercial substance. The asset given up by Gabrille has a book value of P120,000 and a fair value of P135,000. The asset given up by Lucy has a book value of P220,000 and a fair value of P200,000. Cash of P65,000 is received by Lucy. What amount should Gabrille record for the asset received? a. 200,000 b. 110,000 c. 185,000 d. 135,000
Bryant Inc. and Rizzo Co. have an exchange that lacks commercial substance. The asset given up by Bryant Inc. has a book value of $36,500 and a fair value of $48,000. The asset given up by Rizzo Co. has a book value of $50,000 and a fair value of $40,000. Boot of $5,000 is received by Rizzo Co. What amount should Bryant Inc. record for the asset received?
Mariot trades in its old equipment (with the following carrying values) for new equipment. Mariot received $4,000 cash on the exchange. The fair value of the new equipment is $14,000. Original cost of old equipment : $10,000 Accumulated Depreciation on old equipment: $6,000 If the transaction lacks commercial substance, what amount does Mariot assign to the new equipment?
Pina Enterprises sold $791,000 of accounts receivable to Blossom Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Blossom. The transaction meets the criteria for a sale, and no asset or liability components of the receivables are retained by Pina. Blossom Factors assesses a finance charge of 3% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable. Prepare journal entries for both Pina and Blossom. Use the account Due to Customer for Blossom.
ABC Company exchanged equipment with DEF Corp. The following data were available: ABC's equipment had a carrying value of P3,500,000 and fair value of P1.875,000. DEF's equipment has a fair value of P1,000,000 and carrying value of P1,200,000. DEF paid P700,000 cash to ABC. If the exchange LACKS commercial substance, DEF would capitalize the new equipment at: 500,000 1,000,000 1,200,000 1,900,000
Cheyenne Enterprises sold $767,000 of accounts receivable to Oriole Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Oriole. The transaction meets the criteria for a sale, and no asset or liability components of the receivables are retained by Cheyenne. Oriole Factors assesses a finance charge of 3% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable. Prepare journal entries for both Cheyenne and Oriole. Use the account Due to Customer for Oriole. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cheyenne Debit Credit SUPPORT Activate Windows Go to Settings to activate Windows.
Blue Enterprises sold $788,000 of accounts receivable to Crane Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Crane. The transaction meets the criteria for a sale, and no asset or liability components of the receivables are retained by Blue. Crane Factors assesses a finance charge of 4% of the amount of accounts receivable and retains an amount equal to 5% of accounts receivable. Prepare journal entries for both Blue and Crane. Use the account Due to Customer for Crane. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.)
Jersey Inc. and Texas Co. have an exchange with no commercial substance. The asset given up by Jersey Inc. has a book value of $160,000 and a fair value of $200,000. The asset given up by Texas Co. has a book value of $260,000 and a fair value of $280,000. Boot of $80,000 is received by Texas Co. What amount should Jersey Inc. record for the asset received?
Alamos Co. exchanged equipment and $17,000 cash for similar equipment. The book value and the fair value of the old equipment were $80,700 and $90,700, respectively. Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. To equalize fair values, Calaveras paid $8,000 in cash. At what amount will Calaveras value the pickup trucks? How much gain or loss will the company recognize on the exchange? Assume the exchange has commercial substance.

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