Problem 14-86 (b) (LO. 9)Griffin sold three items of business equipment for a total of $144,000. None of the equipment was appraised to determine its value. Griffin's cost and adjusted basis for the assets are shown below.AssetCost AdjustedBasisEquipment1$63,800 $40,000Equipment 234,80032,000Equipment 346,40022,000Total$145,000$94,000 Griffin has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $144,000 to the buyer in this arm's length transaction. How should Griffin allocate the sales price and figure the gain or loss on the sale of the three assets? d. If Griffin allocates the $144,000 selling price to each asset based on its relative adjustedbasis, determine the gain or loss.In your computation round any division to six decimal places. Then, round yourfinal answer to the nearest dollar.AllocatedAdjustedAssetSale PriceBasisDifferenceGain or LossEquipment$40,0001Equipment32,0002Equipment22,000Total$144,000$94,000%24 a. First, Griffin must consider thatof the equipment depreciation taken issubject to recapture asdue to § 1245. If the equipment is sold forthan what was paid for it, the excess of thev is treated asb. If Griffin allocates one-third of the selling price to each asset, determine the gain or loss.Do not round your intermediate computations. If required, round your finalanswers to the nearest dollar.AllocatedAdjustedAssetSale PriceBasisDifferenceGain or LossEquipment$40,0001Equipment32,0002Equipment22,0003Total$144,000$94,000c. If Griffin allocates the $144,000 selling price to each asset based on its relative originalcost, determine the gain or loss.In your computation round any division to two decimal places. If required, roundyour final answer to the nearest dollar.AllocatedAdjustedAssetSale PriceBasisDifference Gain or LossEquipment$40,0001Equipment32,0002Equipment22,000Total$144,000$94,000$4

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Answered: Problem 14-86 (b) (LO. 9) Griffin sold…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 14-86 (b) (LO. 9)

Griffin sold three items of business equipment for a total of $144,000. None of the equipment was appraised to determine its value. Griffin's cost and adjusted basis for the assets are shown below.

Asset	Cost		Adjusted Basis
Equipment1	$63,800		$40,000
Equipment 2	34,800	32,000
Equipment 3	46,400	22,000
Total	$145,000	$94,000

Griffin has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $144,000 to the buyer in this arm's length transaction. How should Griffin allocate the sales price and figure the gain or loss on the sale of the three assets?

d. If Griffin allocates the $144,000 selling price to each asset based on its relative adjusted
basis, determine the gain or loss.
In your computation round any division to six decimal places. Then, round your
final answer to the nearest dollar.
Allocated
Adjusted
Asset
Sale Price
Basis
Difference
Gain or Loss
Equipment
$40,000
1
Equipment
32,000
2
Equipment
22,000
Total
$144,000
$94,000
%24

a. First, Griffin must consider that
of the equipment depreciation taken is
subject to recapture as
due to § 1245. If the equipment is sold for
than what was paid for it, the excess of the
v is treated as
b. If Griffin allocates one-third of the selling price to each asset, determine the gain or loss.
Do not round your intermediate computations. If required, round your final
answers to the nearest dollar.
Allocated
Adjusted
Asset
Sale Price
Basis
Difference
Gain or Loss
Equipment
$40,000
1
Equipment
32,000
2
Equipment
22,000
3
Total
$144,000
$94,000
c. If Griffin allocates the $144,000 selling price to each asset based on its relative original
cost, determine the gain or loss.
In your computation round any division to two decimal places. If required, round
your final answer to the nearest dollar.
Allocated
Adjusted
Asset
Sale Price
Basis
Difference Gain or Loss
Equipment
$40,000
1
Equipment
32,000
2
Equipment
22,000
Total
$144,000
$94,000
$4

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