Talbot purchases business machinery for a price of $100,000. Talbot pays the seller $20,000 in cash and finances the rest by giving the seller a note for $80,000. What is Talbot’s initial basis in this machinery?                                   Refer to the facts of Question #1. Assume Talbot uses the machinery, depreciates $60,000 of the machinery’s cost, and sells the machinery for $50,000 after that time period. Talbot reduced the principal amount of the note to $40,000 during the period of use. The buyer assumes the balance of the note and gives Talbot $10,000 in cash to complete the sale. What is Talbot’s gain on the sale of this machinery?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Talbot purchases business machinery for a price of $100,000. Talbot pays the seller $20,000 in cash and finances the rest by giving the seller a note for $80,000. What is Talbot’s initial basis in this machinery?                                   Refer to the facts of Question #1. Assume Talbot uses the machinery, depreciates $60,000 of the machinery’s cost, and sells the machinery for $50,000 after that time period. Talbot reduced the principal amount of the note to $40,000 during the period of use. The buyer assumes the balance of the note and gives Talbot $10,000 in cash to complete the sale. What is Talbot’s gain on the sale of this machinery?

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