Chapter 10 assigned homework

# Chapter 10 assigned homework - Basis and Gain or Loss Sale...

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Basis and Gain or Loss: Sale of Depreciable Property 21. The adjusted basis of the building at the time of sale is \$450,000 and the realized and recognized gain is \$350,000, computed as follows: Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$570,000 Air conditioning system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Installation of unmovable bookcases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Electrical wiring system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 Partitioning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 \$870,000 Less: Capital recovery (depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . . . 420,000 Adjusted basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$450,000 Selling price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$800,000 Less: Adjusted basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Gain realized and recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$350,000 The \$7,500 painting of the building, the \$3,000 carpet cleaning, and the \$5,000 repairs on the fence are not capitalizable to the building. They are repair and maintenance expenses. Adjusted Basis: Sale of Depreciable Property 22. \$725,000, the cost of \$975,000 less depreciation allowed or allowable of \$250,000. Rex must reduce his basis by the greater of the depreciation allowed or allowable. In this case, \$25,000 depreciation allowed or allowable for 10 years (i.e., \$250,000) must be deducted from \$975,000. Basis: Sale of Stock 24. Basis is \$750, the fair market value of the stock. Taxable income is \$750. Gain or Loss: Sale of Stock and Personal-Use Assets 25. a. Recognized gain of \$2,000. b. Recognized gain of \$2,000 on sale of personal-use assets. c. No loss is recognized on sale of personal-use assets. Allocation of Basis: Depreciable and Nondepreciable Property 26. The basis of the land is \$112,500, the building \$450,000, and the truck \$22,500 and \$45,000 as follows: \$125,000 Land \$700,000 × \$630,000 = \$112,500

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\$500,000 Building \$700,000 × \$630,000 = \$450,000 \$25,000 Truck I \$700,000 × \$630,000 = \$ 22,500 Truck II \$50,000 × \$630,000 = \$ 45,000 \$700,000 Basis and Gain or Loss: Stock Dividends 27. With the 25 percent stock dividend, 30 shares were received, which brings the total number of shares up to 150. Basis after the dividend: \$1,800/150 = \$12.00 per share. (This
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## This note was uploaded on 12/16/2008 for the course ACCT 102 taught by Professor Meyer during the Fall '08 term at Ohio University- Athens.

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Chapter 10 assigned homework - Basis and Gain or Loss Sale...

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