Question
In: Accounting
In year 0, Javens Inc. sold machinery with a fair market value of $610,000 to Chris....
In year 0, Javens Inc. sold machinery with a fair market value of $610,000 to Chris. The machinery’s original basis was $477,020 and Javens’s accumulated depreciation on the machinery was $71,000, so its adjusted basis to Javens was $406,020. Chris paid Javens $61,000 immediately (in year 0) and provided a note to Javens indicating that Chris would pay Javens $91,500 a year for six years beginning in year 1. What is the amount and character of the gain that Javens will recognize in year 0? What amount and character of the gain will Javens recognize in years 1 through 6?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
In year 0, Javens Inc. sold machinery with a fair market value of $630,000 to Chris....
In year 0, Javens Inc. sold machinery with a fair market value
of $630,000 to Chris. The machinery’s original basis was $493,920
and Javens’s accumulated depreciation on the machinery was $73,000,
so its adjusted basis to Javens was $420,920. Chris paid Javens
$63,000 immediately (in year 0) and provided a note to Javens
indicating that Chris would pay Javens $94,500 a year for six years
beginning in year 1.
What is the amount and character of the gain that Javens...
. On December 31, 2017, Eastern Inc. leased machinery with a fair value of $420,000 from...
. On December 31, 2017, Eastern Inc. leased machinery with a
fair value of $420,000 from Northern Rentals. The agreement is a
six-year non-cancellable lease requiring annual payments of $80,000
beginning December 31, 2017. The lease is appropriately accounted
for by Eastern as a finance lease. Eastern’s incremental borrowing
rate is 11%; however, they also know that the interest rate
implicit in the lease payments is 10%. Eastern adheres to
IFRS.
The present value of an annuity due for 6...
On December 31, 2015, Burton, Inc. leased machinery with a fair value of $1,260,000 from Cey...
On December 31, 2015, Burton, Inc. leased machinery with a fair
value of $1,260,000 from Cey Rentals Co. The agreement is a
six-year noncancelable lease requiring annual payments of $240,000
beginning December 31, 2015. The lease is appropriately accounted
for by Burton as a finance lease. Burton’s incremental borrowing
rate is 11%. Burton knows the interest rate implicit in the lease
payments is 10%.
The present value of an annuity due
of 1 for 6 years at 10% is 4.7908....
what is fair market value.
what is fair market value.
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles
that have a fair market value of $38,300. Seneca paid for the
snowmobiles on January 1, 2021, with delivery to occur
subsequently. Unless informed otherwise, assume that Arctic views
the time value of money component of this arrangement to be
significant, and that the relevant interest rate is 11%. (FV of $1,
PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles
that have a fair market value of $30,700. Seneca paid for the
snowmobiles on January 1, 2021, with delivery to occur
subsequently. Unless informed otherwise, assume that Arctic views
the time value of money component of this arrangement to be
significant, and that the relevant interest rate is 12%. (FV of $1,
PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles
that have a fair market value of $33,900. Seneca paid for the
snowmobiles on January 1, 2021, with delivery to occur
subsequently. Unless informed otherwise, assume that Arctic views
the time value of money component of this arrangement to be
significant, and that the relevant interest rate is 8%. (FV of $1,
PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
(Use appropriate...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles that have a fair market value...
Arctic Cat sold Seneca Motor Sports a shipment of snowmobiles
that have a fair market value of $39,700. Seneca paid for the
snowmobiles on January 1, 2021, with delivery to occur
subsequently. Unless informed otherwise, assume that Arctic views
the time value of money component of this arrangement to be
significant, and that the relevant interest rate is 8%. (FV of $1,
PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use
appropriate...
Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000.
Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000. Matulis holds a positive E & P balance. The entity elects S corporation status for 2020 and then sells the asset. Compute the corporate-level built-in gains tax that must be paid by Matulis.
Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000.
Matulis, Inc., a calendar year C corporation, owns a single asset with a basis of $325,000 and a fair market value of $800,000. Matulis holds a positive E & P balance. The entity elects S corporation status for 2020 and then sells the asset. Compute the corporate-level built-in gains tax that must be paid by Matulis.
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