This year, Sigma, Inc
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:This year, Sigma, Incorporated generated $612,000 income from its routine business operations. In addition, the corporation sold the
following assets, all of which were held for more than 12 months:
Marketable securities
Production equipment
Business realty:
Land
Building
Initial Basis
$ 144,000
93,000
165,000
200,000
Accumulated
Depreciation*
$0
76,000
0
58,300
Sale Price
$ 64,000
30,000
180,000
210,000
*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 has
no nonrecaptured Section 1231 losses.
b. Recompute taxable income assuming that Sigma sold the securities for $150,000 rather than $64,000.
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