This year, Amy purchased $4,200 of equipment for use in her business. However, the machine was damaged in a trafficaccident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipmentinto service during the year, she does not claim any depreciation or cost recovery expense for the equipment.c. Suppose that after the accident, Amy could not replace the equipment so she had the equipment repaired for $3,900. What amountcan Amy deduct for the loss of the equipment?Deductible amount

The method by which companies and individuals can gradually recoup the cost of certain assets…

Answered: This year, Amy purchased $4,200 of…

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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Sidney is a car salesman. As a result of being the best salesman for the year, his employer permits him to buy a new BMW with a cost of Fair Market Value to the dealer of $40,000 for only $25,000. This is to be Sidney's personal vehicle and not used in business. As a result of this purchase, Sydney must report. Zero Income or Loss $40,000 income $15,000 income $20,000 income
Required information [The following information applies to the questions displayed below.] This year, Amy purchased $2,000 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. a. After the accident, Amy had the choice of repairing the equipment for $1,800 or selling the equipment to a junk shop for $300. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment? Deductible amount
Iko purchased a house through Stockholm Bank Pvt., Ltd. A year later, Iko wanted to make improvements on the mortgaged property and borrowed money from Jeremy, mortgaging the same property again. Jeremy is unaware of the mortgage of the house by Stockholm Bank and records the mortgage. Analyze the situation in case Iko is unable to repay both the mortgagees.
Emily purchased a building to store inventory for her business. The purchase price was $760,000. Beyond this, Emily incurred the following necessary expenses to get the building ready for use: $10,000 to repair the roof as routine maintenance (did not improve or prolong the life of the asset), $6,000 to make the interior suitable for her finished goods, and $400 in legal fees. What is Emily’s cost basis in the new building? Meg O’Brien received a gift of some small-scale jewelry manufacturing equipment that her father had used for personal purposes for many years. Her father originally purchased the equipment for $1,700. Because the equipment is out of production and no longer available, the property is currently worth $4,000. Meg has decided to begin a new jewelry manufacturing trade or business. What is her depreciable basis for depreciating the equipment?
llene rents her second home. During the year, llene reported a net loss of $10,700 from the rental. If llene is an active participant in the rental and her AGI is $142,500, how much of the loss can she deduct against ordinary income in the year? Multiple Choice ___ $10,700. ___ $6,950. ___ $3,750. ___ $0
Sahana is the trustee of Gina’s bankrupt estate. Gina owns a boutique business which operates from rented premises in a local shopping centre. The business itself is successful. The petitioner’s debt is not business-related. Gina is a qualified engineer and if she were to give up the shop, she could earn at least $130000 p.a. as an employee. Gina is single and has no dependents. Gina owns an apartment worth $500000 which is secured to TownBank. The outstanding mortgage is $330000. The petitioner’s debt is 80000. Additional unsecured debts for the business are approximately $30000. Gina has a personal credit card debt of $10000. Gina leases a car. She owns furniture, clothes, jewellery, a musical instrument and other personal effects. Gina also has $200000 in a superannuation fund. Unfair preferences were paid to 6 creditors prior to the presentation of the Creditor’s petition which totalled $4300. Required: assume you are Suhana. In a roughly chronological order, explain what actions…
Suhana is the trustee of gina's bankrupt estate. Gina owns a boutique business which operates from rented premises in a local shopping centre. The business itself is successful. The petitioner's debt is not business related. Gina is a qualified engineer and if she were to give up the shop she could earn $ 130,000 p.a as an employee . Gina is single and has no dependents. Gina owns an apartment which is worth $ 5,00,000 secured to town bank. The outstanding mortgage is $ 3,30,000. The petitioner's debt is $ 80,000. Additional unsecured debts for the business are approximately $ 30,000. Gina has a personal credit card debt of $ 10,000. Gina leases a car. She owns furniture, clothes, jewelry, a musical instrument and other personal assets. Gina also has $ 2,00,000 in a supwr annuation fund. Unfair preferences were paid to six creditors prior to the presentation of the creditors petition which totalled $ 43,00. Required: assume you are suhana in a roughly chronological order . What…
This year, Amy purchased $2,780 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. Problem 9-57 Part-b (Algo)b. Suppose that after the accident, Amy repaired the equipment for $3,890. What amount can Amy deduct for the loss of the equipment? c. Suppose that after the accident, Amy could not replace the equipment so she had the equipment repaired for $3,800. What amount can Amy deduct for the loss of the equipment?
Rose would like to know the tax consequences of selling her car which she purchased for $22,000 four months ago and has used exclusively for personal use. She has been disappointed with its performance. Based on the “Blue Book” value, she anticipates that she can sell it for $20,000 to $23,000. Rose’s objectives are to minimize the recognition of any realized gain and to maximize the recognition of any realized loss. Based on the foregoing facts, what would you advise Rose to do with regard to the transactions?
[The following information applies to the questions displayed below.] Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn't want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.) a. The vehicle cost $43,000, and business use is 100 percent (ignore $179 expense). Depreciation deduction Year 2021 2022
Jessica sold goods to Stacy for $2,500 and retained a security interest in them. Two months later, Stacy filed a voluntary petition in bankruptcy. At this time, Stacy still owed Jessica $2,000 for the purchase price of the goods, the value of which was $1,500. a. May the trustee invalidate Jessica’s security interest? If so, under what provision? b. If the security interest is invalidated, what is Jessica’s status in the bankruptcy proceeding? c. If the security interest is not invalidated, what is Jessica’s status in the bankruptcy proceeding?
Mr. DEE has owned a modest triplex for a number of years, and all three units have been rented during that time. CCA has been deducted from his income from this property in each year. Mr. DEE has moved into one of the three units during the current year. Because MR DEE will only be renting two of the homes, he will report lower rental revenue. He hasn't sold anything, therefore he won't be reporting any capital gains or losses this year. Is this accurate?

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