Camilo's property, with an adjusted basis of $302,200, is condemned by the state. Camilo receives property with a fair market va
1 answer:
Answer:
a. Realized gain = $45,330
Recognized gain = $0
b. $302,200
Explanation:
a. The realized gain is the increase in Camilo's economic position, that is, the difference between the fair market value of both properties. The recognized gain is the taxable gain, which is zero in this situation, since the new property is a compensation.
b. Since there is no recognized gain, the new property must have the same basis as the previous condemned property, which is $302,200.
You might be interested in
Answer:
a. emphasizes accounting income
Explanation:
Average rate of return is calculated using annual returns, for the period for which the investment is made.
The formula to calculate so =
Where average return during the period = total of return during the entire life of the investment divided into number of years, or tenure of investment.
Average investment = (Opening investment + Closing investment)/2.
Therefore it does not consider the accounting income, it takes into consideration, it considers total return from each particular investment.
Thus emphasizing on accounting income is not an advantage of average rate of return method.