HMC sold equipment December 5, 2018 for $2,000. It originally purchased the equipment February 1, 2010...

HMC sold equipment December 5, 2018 for $2,000. It originally purchased the equipment February 1, 2010 for $12,000. The equipment is fully depreciated for book and tax purposes. For tax purposes, the entire gain is recaptured as ordinary income under Section 1245.

Complete Tax forms 4562(Depreciation and Amortization) and 4797(Sale of business property) for the following transaction. Please include all supporting forms used in your calculation. The forms can be found on the IRS's website. I have no way of uploading them to chegg.

Solutions

Expert Solution

Form 4562 is not required as asset is fully depreciated.

Form 4797 is below:

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

During 2019, a team was sold for $ 39,000. The equipment had originally been purchased for...

During 2019, a team was sold for $ 39,000. The equipment had originally been purchased for $ 64,000 and had a book value of $ 36,000 at the time of sale. The balance of the Accumulated Depreciation account as of December 31, 2018 was $ 172,000 and as of December 31, 2019 it was $ 184,000. Determine and calculate the two adjustments that, based on these data, must be made to net income if the Indirect Method is used to...

ABC Ltd. sold equipment on June 30 2020 for $110,000. The equipment had originally been purchased...

ABC Ltd. sold equipment on June 30 2020 for $110,000. The equipment had originally been purchased for $160,000 on July 1, 2015. At the time of purchase, the equipment’s useful life was estimated to be ten years and to only be worth $10,000 as scrap value at that time. What was the gain or loss reported by ABC on the sale of the equipment? (State any assumptions you make).

Question (1) On January 1, 2010, XYZ Co purchased equipment for $550,000. XYZ expects the equipment...

Question (1) On January 1, 2010, XYZ Co purchased equipment for $550,000. XYZ expects the equipment to remain useful for 5 years and to have a residual value of $50,000. The company uses the straight line method to depreciate its equipment. The company sold the equipment on January 1, 2012 for $370,000 for cash. Required: Compute the annual Depreciation expense for each of 2010 and 2011. 2A: Record the journal entry for Depreciation in 2011. Date Accounts DR CR 12/31/2011...

A company is selling an equipment after four years for $48,887. The equipment was originally purchased...

A company is selling an equipment after four years for $48,887. The equipment was originally purchased for $110,475. The tax rate is 22%.The equipment is classified as a 5-year property. What is the after-tax salvage value?

Helix Company purchased tool sharpening equipment in April 1, 2010 for $72,000. The equipment was expected...

Helix Company purchased tool sharpening equipment in April 1, 2010 for $72,000. The equipment was expected to have a useful life of four years, or 9,000 operating hours, and a residual value of $2,700. The equipment was used for 2,400 hours during 2010, 4,000 hours in 2011, 2,000 hours in 2012, and 600 hours in 2013. Instructions: Determine the amount of depreciation expense for the years ended December 31, 2010, 2011, 2012, and 2013 by each of the following methods:...

The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $100,000 and had an...

The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $100,000 and had an estimated useful life of 10 years and no salvage value, was depreciated for five years using the straight-line method. What is the gain or loss on the sale? the correct answer is $15,000 Weston Company purchased a tooling machine on January 3, 2007 for $1,000,000.The machine was being depreciated on the straight-line method over an estimated useful life of 10 years, with no salvage...

Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.

Abbey INC. Balance Sheet Assets Dec. 31, 2010 Jan. 1, 2010 Inc./Dec. Equipment $39,000 $22,000 $17,000 Inc. Less: Accumulated depreciation -17,000 $ (11,000) 6,000 Inc. Accounts receivable 91000 88,000 3,000 Inc. Cash 45,000 13,000 32,000 Inc. Total $158,000 $112,000...

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2018, Rhone-Metro leased equipment...

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2018, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2022, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $365,760. The expected residual value of $25,000 at December 31, 2022, is not guaranteed. Equal payments under the lease...

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2018, Rhone-Metro leased equipment...

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2018, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2022, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $600,000 to manufacture and has an expected useful life of six years. Its normal sales price is $672,747. The expected residual value of $15,000 at December 31, 2022, is not guaranteed. Equal payments under the lease...

1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to...

1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be: Multiple Choice $19,200 and $30,800 respectively. $19,200 and $28,800 respectively. $17,600 and $26,400 respectively. $17,600 and $32,400 respectively. 2. Cutter Enterprises purchased equipment for $66,000 on January 1, 2018. The equipment is expected to have a five-year life...

Subjects