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lbvjy [14]
4 years ago
11

Harry and Sally formed the Evergreen partnership by contributing the following assets in exchange for a 50 percent capital and p

rofits interest in the partnership.
Basis Fair Market Value Harry:
Cash $30,000 $30,000
Land $100,000 $120,000
Totals $130,000 $150,000
Sally:
Equipment used in business $200,000 $150,000
Totals $200,000 $150,000
a. How much gain or loss will Harry recognize on the contribution?
b. How much gain or loss will Sally recognize on the contribution?
c. Should Sally consider selling the property to the partnership rather than contributing it?
A. Yes
B. No
Business
1 answer:
Marina CMI [18]4 years ago
6 0

Answer:

a) $0

Generally, partners recognize gain on property contributed to a partnership only when the cash they are deemed to receive from debt relief exceeds their basis in the partnership prior to the deemed distribution. Harry did not have any debt relief.

b) $0.

Partners may never recognize loss when property is contributed to a partnership even when they are relieved of debt.

c) Sally should consider selling the property to the partnership rather than contributing it. By selling the property, she could recognize the $50,000 built-in loss on the equipment.

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As EBIT drops, the return on equity (ROE) of a levered firm drops ______ the ROE of an otherwise identical unlevered firm.
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Answer:

Relatively more than

Explanation:

As we know,  

The levered firm is that firm in which debt is involved whereas unlevered firm is that firm in which there is no debt involved.  

As if the EBIT drops, the return on equity drop is relatively more than the ROE of unlevered firms due to involvement and not involvement of debt. As it generated high risk and return which is gradual increases during a given period of time  

3 0
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A market situation where all participants have an incentive to exploit a resource yet no one can limit anyone else's access to t
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Answer:

Tragedy of the Commons

Explanation:

The tragedy of the commons refers to a situation where the individual could access to the resources that are shared for their own interest.

So it is the market situation where the participant expolited the resources also there is no limited for accessing the resources

So the above term should be considered for the given situation

5 0
3 years ago
Better Beverages purchased $139,700 of fixed assets that are classified as five-year MACRS property. The MACRS rates are .2, .32
Gnom [1K]

Answer:

= $115,559.84

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The MACRS represents Modified Accelerated Cost Recovery System and it represents a depreciation method that is accepted for taxation purpose in the United States. The MACRS allows an asset's capitalized cost's recovery over a period of time based on annual deductions.

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the MACRS rate to use at the end of 4 years = 0.2, 0.32, 0.192 and 0.1152

The accumulated depreciation therefore,

= (0.2+0.32+0.192+0.1152) x $139,700

= $115,559.84

6 0
3 years ago
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