Answer:
realized Section 1231 gain = $611,750
Explanation:
book value before the sale is made = $1,000,000 - $411,750 =$588,250
realized Section 1231 gain = selling price - book value = $1,200,000 - $588,250 = $611,750
A Section 1231 gain is realized when a real estate property is sold after the company has held it for more than 1 year.
Two accounting equalities to maintain in transaction analysis are Assets and Liabilities + Equity.
One key element of performing accounting transaction analysis is ensuring that the accounting equation is balanced. This means that for every debit account entry, you must have a credit account entry of the same amount.
This accounting equation works as-
Assets = Liabilities + Equity
Assets- This refers to the resources of a company and includes cash and cash equivalents, accounts receivable, and inventory.
Liabilities and equity- The liabilities of a company refer to its financial obligations, such as loans, long-term debts, mortgages, and notes payable.The shareholder’s equity of a company refers to the dollar value of the company and can be calculated by subtracting its liabilities from its assets. Both liabilities and equity show how the company has financed its assets.
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The effect of the transaction by Atkins Company of collecting payment for an amount owed by a customer is One asset would increase $1,750 and a different asset would decrease $1,750, causing no effect.
<h3>How does an increase and decrease in assets affect the accounting equation?</h3>
The fact that a customer owed Atkins Company means that the customer was an accounts receivable which is an asset account.
The cash that Atkins Company collected is also an asset. So, the transaction simply led to one asset(accounts receivable) being reduced and the other asset(cash) being increased. The amount is the same so there would be no effect.
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Answer:
$8.31 million and No.
Explanation:
In this question, we have to find out the present value which is shown below:
= $1 + first year value ÷ ( 1 + discount rate) + second year value ÷ ( 1 + discount rate) ^ number of years + third year value ÷ ( 1 + discount rate) ^ number of years
= $1 + $2 million ÷ (1 + 10%) + ($3 million ÷ 1.10)^2 + ($4 million ÷ 1.10)^3
= $1 million + $1.82 million + $2.48 million + $3.01 million
= $8.31 million
No the package would not worth $10 million as its present value is $8.31 million
