Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 18, Problem 18DQ
LO.4, 7 In December 2019, Carl Corporation sold land it held as an investment. The corporation received $50,000 in 2019 and a note payable (with adequate interest) for $150,000 to be paid in 2021. Carl Corporation’s cost of the land was $80,000. The corporation has a $90,000 net capital loss carryover that will expire in 2019. Should Carl Corporation report the sale in 2019 or use the installment method to report the income as payments are received?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
On May 7, 2021, Permission to Dance (PTD) Corporation sold a tract of land for P70,000 that resulted in a P30,000 gain on the sale. PTD agreed to accept one payment of P35,000 on August 15 and a second payment of P35,000 on December 15. PTD had a calendar year-end. What amount of gain was reported during the second, third, and fourth quarters of the year from this sale?
On July 1, 2021, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2022. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company?
On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate ConstructionCompany for $2,400,000. The book value of the land on Apex’s books was $480,000. Terms of the sale required adown payment of $120,000 and 19 annual payments of $120,000 plus interest at an appropriate interest rate due oneach April 1 beginning in 2019. Apex has no significant obligations to perform services after the sale.Required:1. Prepare the necessary entries for Apex to record the sale, receipt of the down payment, and receipt of the firstinstallment assuming that Apex is able to make a reliable estimate of possible uncollectible amounts (that is,profit is recognized upon delivery). Ignore interest charges.2. Repeat requirement 1 assuming that Apex cannot make a reliable estimate of possible uncollectible amountsand decides to use the installment sales method for profit recognition
Chapter 18 Solutions
Individual Income Taxes
Ch. 18 - Prob. 1DQCh. 18 - Prob. 2DQCh. 18 - Prob. 3DQCh. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - LO.2 In 2019, the taxpayer became ineligible to...Ch. 18 - LO.2 Osprey Corporation, an accrual basis...Ch. 18 - Prob. 10DQ
Ch. 18 - Prob. 11DQCh. 18 - Prob. 12DQCh. 18 - LO.2 Emerald Motors is an automobile dealer. The...Ch. 18 - Prob. 14DQCh. 18 - Prob. 15DQCh. 18 - Prob. 16DQCh. 18 - Prob. 17DQCh. 18 - LO.4, 7 In December 2019, Carl Corporation sold...Ch. 18 - LO.2, 5 What are the similarities between the crop...Ch. 18 - Prob. 20DQCh. 18 - Prob. 21DQCh. 18 - Prob. 22DQCh. 18 - LO.6 Largo Company is an engineering consulting...Ch. 18 - Prob. 24DQCh. 18 - Prob. 25DQCh. 18 - Prob. 26DQCh. 18 - Prob. 27CECh. 18 - LO.2 Gaffney Corporation is a wholesale...Ch. 18 - Prob. 29CECh. 18 - LO.2 In 2019, Chaya Corporation, an accrual basis,...Ch. 18 - Prob. 31CECh. 18 - Prob. 32CECh. 18 - Prob. 33CECh. 18 - Prob. 34CECh. 18 - Prob. 35CECh. 18 - Prob. 36CECh. 18 - Prob. 37CECh. 18 - Prob. 38CECh. 18 - Prob. 39PCh. 18 - Prob. 40PCh. 18 - Prob. 41PCh. 18 - In 2018, Juan entered into a contract to write a...Ch. 18 - Prob. 43PCh. 18 - Compute Marys income or deductions for 2019 using...Ch. 18 - What accounting method (cash or accrual) would you...Ch. 18 - Blue Company, an architectural firm, has a...Ch. 18 - How do the all events and economic performance...Ch. 18 - Ross Company is a C corporation providing property...Ch. 18 - Prob. 49PCh. 18 - Prob. 50PCh. 18 - Floyd, a cash basis taxpayer, has received an...Ch. 18 - Prob. 52PCh. 18 - Prob. 53PCh. 18 - On June 30, 2019, Kelly sold property for 240,000...Ch. 18 - Prob. 55PCh. 18 - Prob. 56PCh. 18 - Prob. 57PCh. 18 - Prob. 58PCh. 18 - Prob. 59PCh. 18 - Ostrich Company makes gasoline storage tanks....Ch. 18 - Prob. 61PCh. 18 - Grouse Company is a furniture retailer whose...Ch. 18 - Lavender Manufacturing Company began business in...Ch. 18 - Silver Creek Ranch LLC is a small, family-owned...Ch. 18 - In 2019, Gail changed from the lower of cost or...Ch. 18 - At the end of 2020, Magenta Manufacturing Company...Ch. 18 - Prob. 67PCh. 18 - Prob. 68PCh. 18 - Prob. 69PCh. 18 - Prob. 1RPCh. 18 - Prob. 2RPCh. 18 - Prob. 3RPCh. 18 - Paula has sales that qualify to be reported on the...
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.Similar questions
- Ironwood Corporation has ordinary taxable income of $65,000 in 2019, and a short-term capital loss of $15,000. What is the corporation's tax liability for 2019? $7,500 $5,250 $10,500 $13,650 None of the abovearrow_forwardRob Lucci Company sold to another entity a tract of land costing P5,000,000 for P7,000,000 on January 1, 2019. The buyer paid P1,000,000 down and signed a two-year promissory note for the remainder of the purchase price plus 12% interest compounded annually. The note matures on January 1, 2021. REQUIRED: Prepare journal entries for 2019, 2020 and 2021.arrow_forwardOn July 1, 2018, Apache Company, a real estate developer, sold a parcel of land to a construction company for $4,200,000. The book value of the land on Apache's books was $1,800,000. Terms of the sale required a down payment of $300,000 and 13 annual payments of $300,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2019. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company? (Leave no cells blank - be certain to enter "O" wherever required.) 2018 2019 Revenuearrow_forward
- What is the loss on repossession for the year ended December 31, 2022?arrow_forwardOn July 1, 2018, Apache Company, a real estate developer, sold a parcel of land to a construction company for$3,000,000. The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a downpayment of $150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due oneach July 1 beginning in 2019. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company?arrow_forwardOn April 1, 2019, Fastener Corporation, a calendar year, cash method C-Corporation, sold land that it used for 4 years in its business operations. Under the terms of the installment agreement, Fastener Corporation received $100,000 in 2019 (exclusive of interest, which can be ignored for purposes of this question), and will receive $200,000 in 2020, and $300,000 in 2021. Fastener Corporation purchased the land on February 1, 2004 for $400,000. What is the amount and character of gain, if any, that Fastener Corporation must recognize in 2019, 2020, and 2021? Please show your work and explain your calculations.arrow_forward
- On January 1, 2019, Format Company sold a tract of land that was acquired several years ago forP2,800,000. Format received a non-interest bearing note for P4,500,000 due on December 31,2021 inexchange for the land. There is no readily available fair value for the land, but the current market rate ofinterest for comparable notes is 8%. (Round present value factors to 4 decimal places.Required:(a) What are the amounts of interest revenue recognized in Format’s profit and loss for the years 2019and 2020?(b) What is the carrying value of the note at December 31,2019 and at December 31,2020?(c) How would the note receivable be classified on the statement of financial position at December31,2019 and at December 31,2020?arrow_forwardOn July 1, 2018, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000.The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of$150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1beginning in 2019. Apache has no significant obligations to perform services after the sale. How much grossprofit will Apache recognize in both 2018 and 2019 applying the installment sales method?arrow_forwardCubao Short Ribs Company sold a tract of land with carrying amount of $3,000,000 to Anonas Pot Corp. on July 1, 2021. $1,200,000 was collected on the date of sale, and the balance of $2,800,000 is collectible in four equal annual installments of $902,500 consisting of principal and 11% interest on the unpaid balance. The first installment is due on July 1, 2022. What amount related to the notes receivable shall be classified as current assets on December 31, 2022?arrow_forward
- On July 1, 2021, Catlyn Company sold a parcel of undeveloped land to a construction company for $540,000. The book value of the land on Catlyn's books was $140,000. Terms of the sale required a down payment of 10% of the selling price and 9 annual payments of 10% of the selling price plus interest at an appropriate interest rate due on each July 1 beginning in 2022. Catlyn has no significant obligations to perform services after the sale. Calculate the balance in the deferred gross profit account in 2022 applying the installment sales method. (Please round answer to the nearest dollar, i.e. $86,666.67 should be interested as 86667).arrow_forwardAqua Corporation purchases nonresidential real property on May 8, 2019, for $1,650,000. Straight-line cost recovery is taken in the amount of $165,000 before the property is sold on November 27, 2022, for $2,475,000. Question Content Area a. Compute the amount of Aqua's recognized gain on the sale of the realty $_______________ Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture (ordinary income due to § 291). b. § 1231 gain: $_____________ § 1250 recapture (ordinary income due to § 291): $_______________________arrow_forwardOn January 1, 2025, Oriole Co. sells land for which it had paid $707,400 to Sargent Company, receiving in return Sargent's zero- interest-bearing note for $1,000,000 payable in 5 years. What entry would Oriole make to record the sale, assuming that Oriole frequently sells similar items of land for a cash sales price of $651,000? (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation Jan. 1 Notes Receivable Discount on Notes Receivable Debit Creditarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Operating Loss Carryback and Carryforward; Author: SuperfastCPA;https://www.youtube.com/watch?v=XiYhgzSGDAk;License: Standard Youtube License