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Citrus2011 [14]
3 years ago
7

Ula purchased stock in Purple, Inc., six years ago for $150,000. Purple has assets with a value of $225,000 ($175,000 basis) and

liabilities of $60,000. Purple transfers $200,000 of assets and all its liabilities to White Corporation in exchange for White common stock. Purple distributes the White stock and its $25,000 remaining asset (cash) to Ula in exchange for all her Purple stock. Purple then liquidates. How is this transaction treated for tax purposes?
Business
1 answer:
elena55 [62]3 years ago
3 0

Answer:

$15,000 gain

Explanation:

Assets with a value of $225,000

Remaining asset (cash) to Ula ($25,000)

Purple liabilities ($60,000)

Balance $140,000

Balance Brought forward $140,000

Remaining asset (cash) to Ula $25,000

Ula purchased stock ($150,000)

Balance $15,000 gain

Or

$225,000-$25,000-$60,000=$140,000+$25,000-$150,000=$15,000 gain

Therefore we have $15,000 gain.

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Answer:

Cost of equity= 10,50%

Explanation:

The cost of equity is the return a company requires to decide if an iThe cost of equity is the return a company requires to decide if an investment meets capital return requirements. A firm's cost of equity represents the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

Cost of equity= (D1/P0)+g

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In this exercise:

D1=D0*(1+g)=0,90*1,07=$0,963

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g=0,07

Cost of equity= 0,963/27,5+0,07=0,1051=10,50%

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3 years ago
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3 years ago
Identify the accounting assumption or principle that is described below. (a) Belief that a company will remain in operation for
Leviafan [203]

Answer:

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4 0
3 years ago
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aliya0001 [1]

product mix consists of all the product lines and items that a particular seller offers for sale.

<h3>What is product ?</h3>

In the economic sense, a product is anything that may be sold to fulfill a customer's want or need. Product information may be included with a product. The product description is established by law for several product categories. For instance, food products must bear labels that list the contents, ingredients, and best-before date.

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8 0
1 year ago
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lilavasa [31]
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According to these definitions,
<span>he 12-month period a business chooses for its accounting period is a fiscal year.</span>



7 0
3 years ago
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