Actg Essay

3381 Words Nov 21st, 2013 14 Pages
Chapter 10 - Property Dispositions

Chapter 10 Property Dispositions
32. [LO 1] Rafael sold an asset to Jamal. What is Rafael’s amount realized on the sale in each of the following alternative scenarios? a. Rafael received $80,000 of cash and a vehicle worth $10,000. Rafael also pays $5,000 in selling expenses. b. Rafael received $80,000 of cash and was relieved of a $30,000 mortgage on the asset he sold to Jamal. Rafael also paid a commission of $5,000 on the transaction. c. Rafael received $20,000 of cash, a parcel of land worth $50,000, and marketable securities of $10,000. Rafael also paid a commission of $8,000 on the transaction. a. $85,000, computed as follows: Property Received (1) Cash (2) Vehicle (3) Commissions Amount
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f. 1,000 shares of stock in Black corporation that White purchased two years ago because it was a good investment. g. Account receivable from a customer with terms 2/10 net 30. h. Machinery White held for three years and then sold at a loss of $10,000. a. Capital, because it is held for investment. b. The land and building are both §1231 property because White uses the assets in its trade or business and has held the assets property for more than a year. c. Ordinary, the property is ordinary even though it is used in a trade or business because it has been held for less than one year. Once White has held the machinery for more than a year, it will become §1231 property. d. Ordinary, inventory is held in the ordinary course of business. e. §1231, the property is used in a trade or business and held for more than one year. f. Capital, because it is held for investment. g. Ordinary, accounts receivable are created in the ordinary course of business. h. §1231, the property is used in a trade or business and held for more than one year.

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Chapter 10 - Property Dispositions

36. [LO 3, 4] In year 0, Canon purchased a machine to

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