Not use ai please don't 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.

Step 1: Introduction to the Notes PayableIt is an obligation agreed between the parties to repay the…

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
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Consider each of the following independent situations: a. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. b. FST Co. exchanges a machine that cost $4,000 and has accumulated amortization of $3,560 for a similar machine. FST also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There is no commercial substance to the transaction. c. LKC Co. pays $250 and exchanges a machine that cost $3,000 and has accumulated amortization of $1,900 for a similar machine. The fair market value of the old asset is undeterminable. The fair market value of the new asset is $690. The transaction has commercial substance. d. HRT Co. pays $250 and exchanges a…
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Firm R owned depreciable real property subject to a $300,000 nonrecoursemortgage. The property’s FMV is only $250,000. Consequently, the firm surrenderedthe property to the creditor rather than continuing to service the mortgage. At date ofsurrender, Firm R’s adjusted basis in the property was $195,000.Required:Determine Firm R’s cash flow consequences of the disposition, assuming that the gainrecognized is taxed at 21 percent.
Barreto Brewing Company and Blakey Brewing Company exchanged assests on November 1, 2024. This transaction has commercial substance. Details follow: Barreto information Asset given up by Barreto costs the company $10,000 and has accumulated depreciation of $6,000. Fair value of Barreto's asset given up to Blakey is $2,000. Barreto pays $2,000 cash to Blakey. Required: 21. Compute the amount at which Barreto will record the asset acquired from Blakey. B 2. Compute the gain or loss on the assets exchange for Barreto. 43. Prepare the necessary journal entry for Barreto Company regarding the asset exc 5 Note: Write down the calculations OR use Excel function to compute amounts. 5 7 Solution: B כ Requirement 1. 1 Costs of the assets acquired from Blakey: 2 3 4 Requirement 2. 5 6 Gain (loss) on assets exchange: 7 8 9 Requirement 3. 0 1 Date 2 3 4 5 6 7 8 9 0 1 12 Accounts Debits Credits Recording exchange of assets
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

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