Question

In: Accounting

Prater Inc. enters into an exchange in which it gives up its warehouse on 10 acres...

Prater Inc. enters into an exchange in which it gives up its warehouse on 10 acres of land and receives a tract of land. A summary of the exchange is as follows:

Transferred FMV Original
Basis		 Accumulated
Depreciation
Warehouse $ 392,500 $ 311,000 $94,000
Land 90,500 90,500
Mortgage on warehouse 50,500
Cash 23,000 23,000

Assets Received FMV

Land $455,500

What is Prater’s realized and recognized gain on the exchange and its basis in the assets it received in the exchange?

Realized gain
Recognized gain
Adjusted basis in new property

Solutions

Expert Solution


ekkarill92 answered 3 years ago
Next > < Previous

Related Solutions

During 2020, Waldo Inc. sold 10 acres of prime commercial zoned land to a builder for...
During 2020, Waldo Inc. sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave Waldo a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to Waldo in 202 Waldo purchased the land in 2011 for $2,000,000. Using the installment method, how much profit will Waldo report for 2020? $600,000 $1,000,000 $3,000,000 Using the same information as in the preceding question, how much profit will Waldo report for 2020 using the cost...
CoolTech Inc. is considering a new refrigerated warehouse which will cost $7,000,000 and is expected to...
CoolTech Inc. is considering a new refrigerated warehouse which will cost $7,000,000 and is expected to have revenues of $900,000 at the end of each of the next 5 years and expenses of $200,000 for years 1-3 and $250,000 for years 4-5. The warehouse is depreciated for 40 years on a straight line basis and expects to have a salvage value of $1,000,000. At the end of 5 years, they expect to sell the warehouse for $6,000,000. Working capital requirements...
Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10...
Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 60 orange trees on the best land, 40 orange trees on the ok land, and 20 orange trees on the bad land. If he initially is using 2 acres to grow apples, what would be the opportunity cost of growing another orange tree? At first I assumed...
On January 1, 2020 , WXY Inc. replaced the roof on its warehouse. WXY originally built...
On January 1, 2020 , WXY Inc. replaced the roof on its warehouse. WXY originally built the warehouse and placed it into service on January 1, 1995. The cost of the building was $1,000,000. The building has been depreciated using the straight-line method over an originally estimated 40-year useful life with an estimated salvage value of $50,000. Based on original construction records, WXY is able to calculate that the old roof's cost and accumulated depreciation are 8% of the amounts...
On January 1, 2020 , WXY Inc. replaced the roof on its warehouse. WXY originally built...
On January 1, 2020 , WXY Inc. replaced the roof on its warehouse. WXY originally built the warehouse and placed it into service on January 1, 1995. The cost of the building was $1,000,000. The building has been depreciated using the straight-line method over an originally estimated 40-year useful life with an estimated salvage value of $50,000. Based on original construction records, WXY is able to calculate that the old roof's cost and accumulated depreciation are 8% of the amounts...
On January 1, 2018, Star Inc. began construction of a new warehouse for its own use....
On January 1, 2018, Star Inc. began construction of a new warehouse for its own use. The warehouse was completed in 2019. Expenditures on the project in 2018 were as follows:             January 1, 2018           $310,000             March 31, 2018           $600,000             September 1, 2018      $720,000 Star borrowed $600,000 on a construction loan at 6% interest rate on January 1, 2018. The loan was outstanding throughout the construction period. During 2018, the company had $300,000 in 4% bonds and $700,000 in 8% notes outstanding. Star’s capitalized...
Exercise 10-07 Crane Furniture Company started construction of a combination office and warehouse building for its...
Exercise 10-07 Crane Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $14,000,000 on January 1, 2020. Crane expected to complete the building by December 31, 2020. Crane has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 31, 2019 $5,600,000 Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 3,920,000 Long-term loan-11% interest, payable on January...
QUESTION 20 An option is a contract which gives its holder the right to buy or...
QUESTION 20 An option is a contract which gives its holder the right to buy or sell an asset at a predetermined price within a specified period of time. True False QUESTION 21 The exercise price is the price that must be paid for a share of common stock when it is bought by exercising a warrant. True False QUESTION 22 Albany Motors recently completed a 3-for-1 stock split. Prior to the split, the company had 10 million shares outstanding...
Titleist Inc. exchanges its used golf club casting equipment with Callaway Inc. in exchange for a...
Titleist Inc. exchanges its used golf club casting equipment with Callaway Inc. in exchange for a newer piece of casting machinery. The book value of Titleist’s used machine is $75,000 (original cost of $100,000 and accumulated depreciation of 25,000). Titleist also receives $40,000 cash from Callaway. This exchange is deemed to lack commercial substance. Make the appropriate journal entries (2a) If the fair market value of Titleist’s machine is $60,000, how would Titleist account for this transaction? (2b) If the...
On December 31, 2020, Green Bank enters into a debt restructuring agreement with Kingbird Inc., which...
On December 31, 2020, Green Bank enters into a debt restructuring agreement with Kingbird Inc., which is now experiencing financial trouble. The bank agrees to restructure a $1.1-million, 12% note receivable issued at par by the following modifications: 1.Reducing the principal obligation from $1.1 million to $0.88 million 2.Extending the maturity date from December 31, 2020, to December 31, 2023 3.Reducing the interest rate from 12% to 10% Kingbird pays interest at the end of each year. On January 1,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT