Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real estate held as an investment (basis of$1,066,000, fair market value of $1,385,800).a. Determine the gain or loss recognized by Carrot on the distribution if no liability is involved.If no liability is involved, Carrot has a recognizedof $on the distribution.b. Determine the gain or loss recognized by Carrot on the distribution if the real estate is subject to a liability of $1,172,600.If the real estate is subject to a liability of $1,172,600, Carrot has a recognizedof $C.Determine the gain or loss recognized by Carrot on the distribution if the real estate is subject to a liability of $1,492,400.If the liability were $1,492,400, Carrot's recognizedon the distribution would be

a. A corporation recognises both gains and losses at liquidation distribution as if it is sold at…

Answered: Pursuant to a complete liquidation,…

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 32P

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Ee 350.
1. When goodwill is acquired by an investor in an associate, the amortization of goodwill is: A. spread evenly across the useful life of the investment; B. not permitted; C. included in the determination of the investor’s share of the associate’s profit or loss; D. included in the revaluation of the investment. 2. Ginowan Limited acquired a percentage of shares in Juliano Limited for P18 000. Gunawan Limited has no other investments. At the date on which it became an associate, Juliano Limited had the following equity: Share capital P50 000 Retained earnings P40 000 At the end of the financial year following the investment, Juliano Limited generated a profit of P6 000. After applying the equity method of accounting, Gunawan Limited will have the following carrying amount for the investment: A. P19 200 B. P18 000 C. P16 800 D. P9 200.
9 When making non-cash distributions where the fair market value of the property distirbuted exceeds its adjusted basis, corporations must: a. Defer the gain until such time as the recipient shareholder disposes of all stock in the corporation b. Disclose the adjusted basis info to the recipient shareholder so the shareholder may recognize the gain upon disposition. c. Recognize gain under IRC 311
7
Aqua Corporation purchases nonresidential real property on May 8, 2020, for S1, 630, 000. Straight - line cost recovery is taken in the amount of $163, 000 before the property is sold on November 27, 2023, for S2, 445,000.a. Compute the amount of Aqua's recognized gain on the sale of the realty.b. Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture (ordinary income due to § 291). § 1231 gain:§ 1250 recapture (ordinary income due to §
Diamond Corporation uses the fair value model of accounting for its investment property. The fair values of its property were: December 31, 2020, $ 180,000 and December 31, 2021, $ 195,000. At December 31, 2021, Diamond should Select one: a. report a gain of $ 15,000 in other comprehensive income. b. recognize a gain of $ 15,000 in income. c. defer the gain until the property is sold. d. do nothing [ignore it].
When an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR Cash
Copper Industries (a sole proprietorship) sold three § 1231 assets during 2019. Data on these property dispositions are as follows: a. Determine the amount and the character of the recognized gain or loss from the disposition of each asset.b. Assuming that Copper has $6,000 nonrecaptured net § 1231 losses from prior years, analyze these transactions and determine the amount (if any) that will be treated as a long-term capital gain.
If a company incurs disposition obligations as a result of acquiring an asset:\\nQuestion 4 options:\\n\\nThe company recognizes the obligation at fair value when the asset is acquired.\\n\\nThe company recognizes the obligation at fair value when the asset is disposed.\\n\\nThe company records the difference between the fair value of the asset and the obligation when the asset is acquired.\\n\\nNone of the above.
Acquirer Company purchased the net asset of Acquiree Company (excluding cash) by paying P250,000 cash, issuing shares with a fair value of P1,810,000 and issuing a bond debenture with a fair value of P380,000 on January 2, 2022. The financial statements of Acquirer and Acquiree as of this date were as follows (see image below).The book value reflected the fair value of the assets and liabilities except that the inventory of Acquirer had a fair value of 1,500,000 and the inventory and equipment of Acquiree had fair values of P750,000 and P1,400,000 respectively. Acquirer also incurred the following costs: Finder’s fee – P10,000; Accountant’s fee – P15,000; Legal fees – P7,500; Printing of stock certificates – P5,000; and Audit and accountant’s fee related to stock issuance – P20,000. Acquirer only paid 50% of the said acquisition related costs. Answer the following: a. How much is the Consolidated Equity? b. How much is the Goodwill/Gain on Bargain Purchase? c. How much is the…
Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the consideration transferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of $600,000 is therefore thedifference between the aggregate of the consideration transferred and the net identifiable assets acquired. The fair value of the net identifiable assets of Pax Limited are determined as follows: ($000) Patent rights 200 Machinery 1,000 Buildings 1,500 Land 2,300 5,000 Less: Bank loan 600 Net assets 4,400 At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be PaxLtd, totals $4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, is unchanged and remains at $4,400,000. Required: a)Prepare the journal…
Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the considerationtransferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of$600,000 is therefore the difference between the aggregate of the consideration transferred and the net identifiable assets acquired. The fair value of the net identifiable assets of Pax Limited are determined as follows: ($000) Patent rights Machinery Buildings Land Less: Bank loan Net assets 200 1,000 1,500 2,300 5,000 600 4,400 At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Pax Ltd, totals $4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, is unchanged and remains at $4,400,000. Required: a) Prepare the journal entry to account for any impairment of goodwill. b) Assume instead that at the end of the…

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