What basis does Forest Corporation has in: Equipment Land Office equipment
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
What basis does Forest Corporation has in:
- Equipment
- Land
- Office equipment
![Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation:
**Items Transferred**
| Issued | Basis | Fair Market Value | Number of Shares |
|--------|-------|-------------------|------------------|
| **From Elaine:** | | | |
| Cash | $60,000 | $60,000 | 200 shares |
| Equipment | $30,000 | $340,000 | |
| **From James:** | | | |
| Land | $100,000 | $540,000 | 200 shares |
| Mortgage | $140,000 | $140,000 | |
| **From Jeremy:** | | | |
| Office Equipment | $50,000 | $260,000* | 100 shares |
Notes:
- Besides receiving 100 shares of stock, Jeremy also received $60,000 of cash.
- Forest Corporation assumed the mortgage transferred by James.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F585055c6-b06c-4ced-af10-4617668120f0%2Fc05802db-ec10-4158-a319-b5925cb19603%2F3fgpmxe_processed.png&w=3840&q=75)
Transcribed Image Text:Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the corporation:
**Items Transferred**
| Issued | Basis | Fair Market Value | Number of Shares |
|--------|-------|-------------------|------------------|
| **From Elaine:** | | | |
| Cash | $60,000 | $60,000 | 200 shares |
| Equipment | $30,000 | $340,000 | |
| **From James:** | | | |
| Land | $100,000 | $540,000 | 200 shares |
| Mortgage | $140,000 | $140,000 | |
| **From Jeremy:** | | | |
| Office Equipment | $50,000 | $260,000* | 100 shares |
Notes:
- Besides receiving 100 shares of stock, Jeremy also received $60,000 of cash.
- Forest Corporation assumed the mortgage transferred by James.
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