This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $ 182,000 $ 0 $ 64,500 Production equipment 96,800 77,440 50,750 Business realty: Land 214,500 0 234,250 Building 248,000 74,400 243,000 *Through date of sale. Required: 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. Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $ 182,000 $ 0 $ 64,500 Production equipment 96,800 77,440 50,750 Business realty: Land 214,500 0 234,250 Building 248,000 74,400 243,000 *Through date of sale. Required: 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. Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
This year, Sigma, Incorporated generated $656,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months:
| Initial Basis | Sale Price | ||
|---|---|---|---|
| Marketable securities | $ 182,000 | $ 0 | $ 64,500 |
| Production equipment | 96,800 | 77,440 | 50,750 |
| Business realty: | |||
| Land | 214,500 | 0 | 234,250 |
| Building | 248,000 | 74,400 | 243,000 |
*Through date of sale.
Required:
- 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.
- Recompute taxable income assuming that Sigma sold the securities for $188,500 rather than $64,500.
Expert Solution
Step 1
Answer:-
Taxable income meaning:- The amount of income used to determine whether an individual or business owes taxes is generally known as their taxable income. A common term for taxable income is adjusted gross income, which is defined as adjusted income minus any deductions.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education