Oakridge Tech Inc. had a commercial facility destroyed in a hurricane. The old facility was originally purchased for $480,000, and the company had claimed $125,000 in depreciation. The insurance company paid $790,000 in proceeds. Although the new facility is larger and more modern, it qualifies as replacement property under the IRS rules. Oakridge Tech Inc. purchased the new facility 14 months after the hurricane for $850,000. What is the amount of Oakridge Tech Inc.'s realized gain, recognized gain, and the basis in the new facility?
Oakridge Tech Inc. had a commercial facility destroyed in a hurricane. The old facility was originally purchased for $480,000, and the company had claimed $125,000 in depreciation. The insurance company paid $790,000 in proceeds. Although the new facility is larger and more modern, it qualifies as replacement property under the IRS rules. Oakridge Tech Inc. purchased the new facility 14 months after the hurricane for $850,000. What is the amount of Oakridge Tech Inc.'s realized gain, recognized gain, and the basis in the new facility?
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 39P
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Please provide the solution to this financial accounting question using proper accounting principles.
Transcribed Image Text:Oakridge Tech Inc. had a commercial facility destroyed in a hurricane. The old
facility was originally purchased for $480,000, and the company had claimed
$125,000 in depreciation. The insurance company paid $790,000 in proceeds.
Although the new facility is larger and more modern, it qualifies as replacement
property under the IRS rules. Oakridge Tech Inc. purchased the new facility 14
months after the hurricane for $850,000.
What is the amount of Oakridge Tech Inc.'s realized gain, recognized gain, and
the basis in the new facility?
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