o. Dirksen depreciated the machinery using MACRS (seven-year recovery period). What are the amount and character of the gain or oss Dirksen will recognize on the sale if the machine is sold on January 15 of year 1 instead? Note: Round other intermediate computations to the nearest whole dollar amount. X Answer is complete but not entirely correct. Description Total Gain or (Loss) Recognized Character of Recognized Gain or (Loss): Ordinary Gain or (Loss) §1231 gain or (loss) $ $ $ Amount 4,119 X 4,119 x 0✔

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
**Example Problem: MACRS Depreciation and Asset Sale**

On August 1 of year 0, Dirksen purchased a machine for $20,000 to use in its business. On December 4 of year 0, Dirksen sold the machine for $18,000. Use the MACRS Table for calculations.

**Important Notes:**
- Loss amounts should be indicated by a minus sign.
- Do not round percentages used for calculations.
- Leave no answers blank. Enter zero if applicable.

**Problem 11-42 Part-b (Static):**

Dirksen depreciated the machinery using MACRS with a seven-year recovery period. What are the amount and character of the gain or loss Dirksen will recognize on the sale if the machine is sold on January 15 of year 1 instead?

**Note:**
- Round other intermediate computations to the nearest whole dollar amount.

**Analysis Result:**
- The provided answer is complete but not entirely correct.

**Gain or Loss Calculation Table:**

| Description                          | Amount  |
|--------------------------------------|---------|
| Total Gain or (Loss) Recognized      | $4,119✖️ |
| Character of Recognized Gain or (Loss):         |
| Ordinary Gain or (Loss)              | $4,119✖️ |
| §1231 gain or (loss)                 | $0✅    |

The table illustrates the breakdown of the recognized gain or loss on the sale of the machinery. It breaks down into ordinary gain or loss and §1231 gain or loss, indicating the components that form the total recognized gain or loss.
Transcribed Image Text:**Example Problem: MACRS Depreciation and Asset Sale** On August 1 of year 0, Dirksen purchased a machine for $20,000 to use in its business. On December 4 of year 0, Dirksen sold the machine for $18,000. Use the MACRS Table for calculations. **Important Notes:** - Loss amounts should be indicated by a minus sign. - Do not round percentages used for calculations. - Leave no answers blank. Enter zero if applicable. **Problem 11-42 Part-b (Static):** Dirksen depreciated the machinery using MACRS with a seven-year recovery period. What are the amount and character of the gain or loss Dirksen will recognize on the sale if the machine is sold on January 15 of year 1 instead? **Note:** - Round other intermediate computations to the nearest whole dollar amount. **Analysis Result:** - The provided answer is complete but not entirely correct. **Gain or Loss Calculation Table:** | Description | Amount | |--------------------------------------|---------| | Total Gain or (Loss) Recognized | $4,119✖️ | | Character of Recognized Gain or (Loss): | | Ordinary Gain or (Loss) | $4,119✖️ | | §1231 gain or (loss) | $0✅ | The table illustrates the breakdown of the recognized gain or loss on the sale of the machinery. It breaks down into ordinary gain or loss and §1231 gain or loss, indicating the components that form the total recognized gain or loss.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education