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 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: Initial BasisAccumulated Depreciation*Sale PriceMarketable securities$144,000$0$64,000Production equipment93,00076,00030,000Business realty: Land165,0000180,000Building200,00058,300210,000*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 $150,000 rather than $64,000.

Depreciation is a method of reducing the book value of a fixed asset over a period of time. There…

Answered: This year, Sigma, Incorporated…

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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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
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:
	Initial Basis	Accumulated Depreciation*	Sale Price
Marketable securities	$144,000	$0	$64,000
Production equipment	93,000	76,000	30,000
Business realty:
Land	165,000	0	180,000
Building	200,000	58,300	210,000
*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 $150,000 rather than $64,000.

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