. The XYZ partnership has the following balance sheet: BasisFMVLand $60,000$81,000Inventory $27,000$54,000Unrealized Rec.$ 0$15,000 Liabilities $30,000$30,000 Capital, X $21,000$40,000Capital, Y $18,000$40,000Capital, Z $18,000$40,000 $87,000$150,000 If X sells her partnership interest to W for $40,000 cash ($10,000 this year and $30,000 next year), what is her gain or loss each year, and what is its character? (Assume each partner has a 1/3 share of liabilities.)

When investment interest is sold, then capital gain or loss is recognized. Nature of capital gain or loss is determines on the basis of holding period.In this case, holding period is more than 1 year, therefore, a long term capital gain will be recognized. The mount of gain recognized by X = $40,000 - $21,000 = $19,000

Answered: The XYZ partnership has the following…

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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. The XYZ partnership has the following balance sheet:

		Basis	FMV
Land		$60,000	$81,000
Inventory		$27,000	$54,000
Unrealized Rec.	$ 0	$15,000

Liabilities		$30,000	$30,000

Capital, X		$21,000	$40,000
Capital, Y		$18,000	$40,000
Capital, Z		$18,000	$40,000
		$87,000	$150,000

If X sells her partnership interest to W for $40,000 cash ($10,000 this year and $30,000 next year), what is her gain or loss each year, and what is its character? (Assume each partner has a 1/3 share of liabilities.)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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