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MrRissso [65]
3 years ago
15

Tara purchased a machine for $40,000 to be used in her business. The cost recovery allowed and allowable for the three years the

machine was used are computed as follows. Cost Recovery Allowed Cost Recovery Allowable Year 1 $16,000 $ 8,000 Year 2 9,600 12,800 Year 3 5,760 7,680 If Tara sells the machine after three years for $15,000, how much gain should she recognize? a.$9,240 b.$6,360 c.$11,480 d.$3,480
Business
1 answer:
nexus9112 [7]3 years ago
7 0

Answer:

c. $11,480

Explanation:

Given that

               Cost recovery allowed                Cost recovery allowable

Year 1         $16,000                                                $8,000

Year 2        $9,600                                                  $12,800

Year 3        $5,760                                                  $7,680

The computation of gain should Tara recognize is shown below:-

Cost                                           $40,000

Less:

Greater cost of recovery

allowable or allowed

Year 1                $16,000

Year 2               $12,800

Year 3               $7,680            $36,480

Adjusted basis                          $3,520

Gain to be recognized = Residual value - Adjusted basis

= $15,000 - $3,520

= $11,480

So, for computing the gain to be recognized we simply deduct the adjust basis from residual value.

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Answer: It’s B

Explanation:2+2=4

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3 years ago
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In a $1031 like-kind exchange, Rafael exchanges a business building that originally cost $346,800. On the date of the exchange,
Andreyy89

Answer:

A. $52,020

B. $0

C. $208,080

Explanation:

a. Computation of Rafael's realized gain on the exchange

Using this formula

Realized gain=Fair market value -Adjusted basis

Let plug in the formula

Realized gain= $190,740-$138,720

Realized gain=$52,020

Therefore a. Rafael's realized gain on the exchange is $52,020

b. Based on the information given Rafael's recognized $1031 gain is $0 reason been that

NO BOOT WAS RECEIVED

c. Computation for Rafael's $1245 depreciation recapture Amount

Using this formula

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Let plug in the formula

Depreciation recapture=$346,800-$138,720

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Therefore Rafael's $1245 depreciation recapture of $208,080 is carried over to the replacement property

4 0
3 years ago
When does the price of an item increase?
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WHEN TAXES GET HIGH

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7 0
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9. A bank loaned York Construction Company $35,000 on a 1-year, 6% note, but deducted the interest in advance. The journal entry
Rudiy27

Answer: The correct answer is c. increase in Discount on Notes Payable for $2,100.

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Answer:

Normal conditions not applying.

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