This year, Sigma, Incorporated generated $637,500 income from its routine business operations. In addition, the corporation sold thefollowing assets, all of which were held for more than 12 months:InitialBasis$ 165,200110,800AccumulatedDepreciation$088,640223,500206,000Marketable securitiesProduction equipmentBusiness realty:LandBuilding."Through date of sale.Required:a. Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and hasno nonrecaptured Section 1231 losses.b. Recompute taxable income assuming that Sigma sold the securities for $169,400 rather than $73,750.Complete this question by entering your answers in the tabs below.Sale Price$ 73,75038,000061,800236,750231,000Required A Required BCompute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building andhas no nonrecaptured Section 1231 losses.Taxable income

Taxable income refers to the portion of an individual's earnings that is subject to income tax. It's…

Answered: Required: a. Compute Sigma's taxable…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Required:.b. What is the character of this gain capital gain and ordiary gain?
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PROBLEM 1: TRUE OR FALSE 1. Land held for a currently undecided future use or for speculation should be reported in the property, plant, and equipment section of the statement of financial position. 2. According to PAS 16, an item of PPE acquired through purchase is initially recognized at fair value. 3. Decommissioning and restoration costs are included in the cost of a PPE only if the entity has a present obligation for such costs. 4 Costs incurred after a PPE is operating in the manner originally intended by management are capitalized. 5. Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full as cost of the asset or allocated in part to normal operations. 5. When the cost of a self-constructed asset is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidence indicating that the cost is materially excessive because of construction inefficiencies or failures. 7. If the…
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! Required information [The following information applies to the questions displayed below.] Hart, an individual, bought an asset for $500,000 and has claimed $100,000 of depreciation deductions against the asset Hart has a marginal tax rate of 32 percent. Answer the questions presented in the following alternative scenarios (assume Hart had no property transactions other than those described in the problem): Note: Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answers blank. Enter zero if applicable. Required: d1. What are the amount and character of Hart's recognized gain or loss if the asset is a nonresidential building sold for $450,000? d2. What effect does the sale have on Hart's tax liability for the year? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required d1 Required d2 What effect does the sale have on Hart's tax liability for the year? Tax liability…
An amortization schedule shows Group of answer choices A)how a company amortizes an intangible asset. b)the amount of goodwill a company will report on their balance sheet. c)a summary total of all interest paid to creditors. d)all of a company’s long-term notes payable. e)None of the above
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Compute the following. 1. Total gain. 2. Contract price. 3. Payments received in the year of sale. 4. Recognized gain in the year of sale and the character of such gain. а. (Hint: Think carefully about the manner in which the property taxes are han- dled before you begin your computations.) b. Same as parts (a)(2) and (3), except that Kay's basis in the property was $35,000.
Business K exchanged an old asset (FMV $95,000) for a new asset (FMV $95,000). Business K's tax basis in the old asset was $113,000. Required: a. Compute Business K's realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction. b. Compute Business K's realized loss, recognized loss, and tax basis in the new asset, assuming the exchange was a nontaxable transaction. c. Six months after the exchange, Business K sold the new asset for $103,000 cash. How much gain or loss does Business K recognize if the exchange was taxable? How much gain or loss if the exchange was nontaxable? Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute Business K's realized loss, recognized loss, and tax basis in the new asset assuming the exchange was a taxable transaction. Note: Losses should be indicated with a minus sign. Realized loss Recognized loss Tax basis Amount
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5. How should accounting fees for acquisition be treated? A. Expensed in the period of acquisition B. Capitalized as part of acquisition cost C. Deferred and amortized D. Deferred until the company is disposed of or wound-up 6.The excess of the price paid over the fair value of the net identifiable assets acquired should be recognized as A. Goodwill to be amortized periodically for 20 yearS. B. Expenses immediately C. Goodwill not subject to amortization but subject to impairment D. Goodwill to be amortized for 40 years 7.Under PFRS 3 (Business Combinations) A. Both direct and indirect costs are to be capitalized B. Both direct and indirect costs are to be expensed C. Direct costs are to be capitalized and indirect costs are to be expensed D. Indirect costs are to be capitalized and direct costs are to be expensed

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Required: a. Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. b. Recompute taxable income assuming that Sigma sold the securities for $169,400 rather than $73,750.