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Novay_Z [31]
2 years ago
6

Lena is a sole proprietor. In April of this year, she sold equipment purchased four years ago for $26,000 with an adjusted basis

of $15,500 for $17,000. Later in the year, Lena sold another piece of equipment purchased two years ago with an adjusted basis of $8,200 for $5,500. What are the tax consequences of these tax transactions?
Lena has Selecta:
(capital gain, a capital loss, an ordinary gain, an ordinary loss) of $_______ from the sale of the first equipment.
Lena has Selecta:___________.
Business
1 answer:
viva [34]2 years ago
7 0

Answer:

  1. Lena has a ORDINARY GAIN of $1,500 from the sale of the first equipment.
  2. Lena has a ORDINARY LOSS of $2,700 from the sale of the second equipment.

Explanation:

Lena sold the first equipment for $17,000, and that resulted in an ordinary gain = $17,000 - $15,500 = $1,500. This gain was due to a §1245 depreciation recapture.

Lena sold the second equipment for $5,500, and that resulted in an ordinary loss (§1231 loss) = $5,500 - $8,200 = $2,700.

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as of december 31, the unadjusted balance in deferred revenue contains $5,600 for unredeemed gift cards. an analysis of the mont
Masteriza [31]

These transaction  will affect the adjustments at the end of the period by:

  • Decrease Unearned Revenue
  • Increase Sales revenue

Since the gift cards was  redeemed during the month which means that Unearned Revenue will have to be  decreased by the costs of gift cards that was redeemed during the month.

Calculated as:

Unearned Revenue=$5,600-$3,200

Unearned Revenue=$2,400  decrease

Since the gift cards was  redeemed during the month which means that  will have  increased Sales revenue by the costs of  of gift cards that was redeemed during the month.

Calculated as:

Sales revenue=$5,600+$3,200

Sales revenue=$8,800 Increase

Inconclusion These transaction  will affect the adjustments at the end of the period by:

  • Decrease Unearned Revenue
  • Increase ​Sales revenue

Learn more here:

brainly.com/question/16202816

6 0
1 year ago
A project requires an initial investment of $60,000 and has a project profitability index of 0.329. The present value of the fut
OleMash [197]

Answer:

The present value of the future cash inflows from this investment is $19,740

Explanation:

Profitability Index is a useful tool for ranking project because we can know the amount/ value created by per unit of investment.

Profitability Index = Present value of future cash flow/ Initial Investment

↔ 0.329 = Present value of future cash inflow/ $60,000

↔ Present value of future cash inflow = 0.329 * $60,000 =$19,740

8 0
3 years ago
your firm is contemplating the purchase of a new $545,000 computer-based order entry system. the system will be depreciated stra
liberstina [14]

The IRR of the new computer-based order entry system is 22.87%.

<h3>What is the IRR?</h3>

Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested

The cash flow at the beginning of the period = purchase price of the system - reduction in working capital

$545,000 - $96,000 = $449,000

Depreciation expense = (cost of the asset - salvage value) / useful life

($545,000 - 0) / 5 = $109,000

Cash flow each year from year 1 to 5 = (amount saved - depreciation)(1 - taxes) + depreciation

($165,000 - $109,00)(1 - 0.22) + $109,000 = $152,680

Terminal cash flow = Salvage value - (tax x salvage value)

$71,000 - (0.22 x 71,000) = $55,380

IRR can be determined using a financial calculator:

Cash flow in year 0 = $-449,000

Cash flow in year 1 - 4= $152,680

Cash flow in year 5 = $152,680 + $55,380 = 208,060

IRR = 22.87%

To learn more about IRR, please check: brainly.com/question/26484024

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3 0
1 year ago
The English economist David Ricardo argued that Group of answer choices None of the answers is correct grain prices were high be
Andrei [34K]

Answer:

land rents were high because grain prices were high..

Explanation:

grain prices were high because land rents were high.

land rents were high because grain prices were high.

grain prices were high because land rents were low.

land rents were high because grain prices were low.

none of the above

David Ricardo was a classical economist known for various economic theory. Some of his theories include :

  1. Labour Theory of Value
  2. Ricardian Equivalence
  3. Theory of comparative advantage
  4. Theory of rent

Theory of rents

David Ricardo defined rest as the part of the produce of an agricultural land that is paid to the landowner for the use of the land.  He postulated that  benefits of an increase in prices of grain accrue to land owners in the form of rent

He used this theory to answer a question that arose during the Napoleonic wars (18.05-1815)  when there was a great increase in corn and land prices. The question was : Did the rise in land prices raise the price of corn or did the high price of corn increase the demand for land and led to an increase in the price of land ?

5 0
3 years ago
Babcock Company purchased a piece of machinery for $36,000 on January 1, 2019, and has been depreciating the machine using the s
pogonyaev

Answer:

<u>Requirement 1:</u>

Dr Accumulated Depreciation $9,600

Cr Retained Earnings  Account      $9,600

<u>Requirement 2:</u>

Dr Depreciation Expense $6,000

Cr Accumulated Depreciation $6,000

Explanation:

Year  Remaining Life of machine  Depreciation fraction

1                               5                                           5/15

2                              4                                           4/15

3                              3                                           3/15

4                              2                                           2/15

5                          <u>    1     </u>                                       1/15

Total                       15  

Now here, the depreciation formula is as under:

Depreciation expense = (Cost - Salvage Value) * Fraction value

<u>Year 2019:</u>

The sum of years digit fraction would be 5/15 and the cost of the machinery is $36,000. So

Depreciation Expense = ($36,000 - 0) * 5/15  = $12,000

<u>Year 2020:</u>

The sum of years digit fraction would be 5/15 and the cost of the machinery is $36,000. So

Depreciation Expense = ($36,000 - 0) * 4/15  = $9,600

<u>Year 2021:</u>

Now in this year the there is change in estimate and a switch in the use of the depreciation method, which is now straight line method. The change in estimate only includes the useful life of the asset which is 6 years from the date of purchase.

So for straight-line depreciation:

Depreciation Expense = (Cost - Salvage Value)  / Useful Life

By simply putting values, we have:

Depreciation Expense = $36,000 / 6 years = $6,000 per year

So this means, according to change in accounting policy, the excess depreciation charged must be eliminated from the previous years. The depreciation charge for the previous 2 years must be $12,000 and the excess depreciation charge is calculated as under:

Carrying value of the asset = $21,600 - $12,000  = $9,600

<u>Requirement 1:</u>

The double entry according to the US GAAP, for the excess depreciation charge in the previous years would be the waiving off of retained earnings with the excess depreciation amount calculated above.

Dr Accumulated Depreciation $9,600

Cr Retained Earnings  Account      $9,600

<u></u>

<u>Requirement 2:</u>

The depreciation expense for the year 2021, would be recorded as under:

Dr Depreciation Expense $6,000

Cr Accumulated Depreciation $6,000

3 0
3 years ago
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