1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ilia_Sergeevich [38]
2 years ago
8

Liz and John formed the equal LJ Partnership on January 1 of the current year. Liz contributed $80,000 of cash and land with a f

air market value of $90,000 and an adjusted basis of $75,000. John contributed equipment with a fair market value of $170,000 and an adjusted basis of $20,000. John had previously used the equipment in his sole proprietorship.a. How much gain or loss will Liz, John, and the partnership realize?b. How much gain or loss will Liz, John, and the partnership recognize?c. What bases will Liz and John take in their partnership interests?d. What bases will LJ take in the assets it receives?e. Are there any differences between inside and outside basis? Explain.f. How will the partnership depreciate any assets it receives from the partners?
Business
2 answers:
Maurinko [17]2 years ago
6 0

Answer:

a. Liz = $15,000; John = $150,000; and Partnership = $165,000

b. No gain or loss will be recognized.

c. Liz = $155,000; and John = $175,000

d. $330,000

e. Yes, there are.

f. The method of depreciation and remaining depreciable useful life of the property used by the partner that transfer the asset will continue to be used by the partnership.

Explanation:

a. How much gain or loss will Liz, John, and the partnership realize?

Amount to realize = Asset fair market value - adjusted basis

Amount to realize by Liz = $90,000 - $75,000 = $15,000

Amount to realize by John = $170,000 - $20,000 = $150,000

Amount to realize by Partnership = ($90,000 + $170,000) – ($75,000 + $20,000) = $165,000

b. How much gain or loss will Liz, John, and the partnership recognize?

The general rule under Sec. 721 of partnership states that no gain or loss should be recognized on the property is transferred by a partner in exchange for an interest in a partnership.

Therefore, Liz, John, and the partnership recognize will not recognize any gain or loss.

c. What bases will Liz and John take in their partnership interests?

Bases to take = Cash contributed + Asset adjusted basis

Bases to take by Liz = $80,000 + $75,000 = $155,000

Bases to take by John = $0 + $175,000 = $175,000

d. What bases will LJ take in the assets it receives?

Bases taken by a partnership in received assets is the addition of bases taken by all partners in a partnership. Therefore,

Bases taken by LJ in received assets = $155,000 + $175,000 = $330,000

e. Are there any differences between inside and outside basis? Explain.

Yes, there are.

The inside basis refers to the tax basis of partnership in each of the assets contributed to the partnership by partners, while the outside basis refers to the tax basis of the interest of each partner in a partnership as result of asset contributed to the partnership.  

Therefore, inside basis can be considered to be the addition of each individual outside basis in a partnership.

f. How will the partnership depreciate any assets it receives from the partners?

When a partner contributes a depreciable property to a partnership, the partnership is considered to have taken over from the partner that contributed the asset. Therefore, the method of depreciation and remaining depreciable useful life of the property used by the partner that transfer the asset will continue to be used by the partnership.

GrogVix [38]2 years ago
5 0

Answer:

A partnership assumes the same depreciation schedule of the contributing party. If this were not  so, individuals could accelerate depreciation rates and bypass taxes.

Explanation:

Here, transfer included money; therefore L will recognize $15,000 as gain on property. J  recognizes the $150.000 gain on equipment because it was used in a sole proprietorship. The  partnership will not recognize any gain loss.

In the formation of a partnership there is no gain to be recognized.

Both parties will take a basis of the property after deducting any realized gain. L takes a basis of  the cash and property. which is $155,000. While J takes a basis of the property after deducting  realized gain, therefore j’s bases is $20.000.

The company will carry the basis at the same rate the partners have in the property. which is  $175,000.

The inside basis is the basis the partnership carries assets at. This is the donated value of

property given at formation plus any additions throughout the company’s life,

The outside basis is the basis the partners carry the property at. This basis is changed by the

partnership’s actions, through improvements, distributions, and contributions.

You might be interested in
Dorothy and matt are ready to purchase their first home. their current monthly cash inflows are $4900, and their current cash ou
podryga [215]
Current monthly cash inflows = $4,900

Current monthly cash outflows = $3,650.

Monthly Rent = $650

Monthly savings = 10% of their cash inflows = 10%...
5 0
2 years ago
Two ships leave port at the same time, Ship X is heading due north and Ship Y is heading due east. Thirteen hours later they are
Serjik [45]
Answer: B


Explanation:

5 0
3 years ago
Read 2 more answers
Sunland Company just began business and made the following four inventory purchases in June: June 1 144 units $1000 June 10 192
Sergio039 [100]

Answer:

The First-in, First-out has the lower cost of goods sold, therefore, it will provide with a higher gross profit.

Explanation:

Giving the following information:

June 1: 144 units for $1000 ($6.94 per unit)

June 10: 192 units for $1500 ($7.81 per unit)

June 15: 192 units for  $1610 ($8.38 per unit)

June 28: 144 units for  $1270 ($8.82 per unit)

Ending inventory in units= 200 units on hand.

The method that will provide a higher gross profit is the one with the lower cost of goods sold.

Inventory methods:

<u>FIFO (first-in, first-out):</u>

COGS= 144*6.94 + 192*7.81 + 136*8.38= $3,639

<u>LIFO (last-in, lsdt-out)</u>

COGS= 144*8.82 + 192*8.38 + 136*7.81= $3,941

<u>Weighted-average:</u>

Average price= (6.94 + 7.81 + 8.38 + 8.82)/4= $7.99

Now, we can calculate the cost of goods sold:

COGS= 7.99*472= $3,771.28

<u>The First-in, First-out has the lower cost of goods sold, therefore, it will provide with a higher gross profit.</u>

8 0
3 years ago
Use the three-step demand-supply analysis discussed in class to analyze changes to the equilibrium price, and quantity in the ca
Ghella [55]

A new computer chip affects the supply curve only.

Demand-supply is an economic version of price determination in a market. It postulates that preserving all else identical, in an aggressive market, the unit price for a specific appropriate, or other traded item which includes hard work or liquid financial property, will range till it settles at a point in which the quantity demanded (at the modern price) will same the quantity supplied (on the modern-day price), ensuing in an economic equilibrium for rate and quantity transacted.

Equilibrium is a scenario wherein economic forces consisting of delivery and demand are balanced and in the absence of outside impacts the values of economic variables will no longer alternate.

Philosophical analysis is any of various techniques, typically used by philosophers in the analytic culture, to be able to "damage down" philosophical problems. Arguably the maximum prominent of those techniques is the evaluation of concepts.

Learn more about Demand-supply here: brainly.com/question/4804206

#SPJ4

7 0
1 year ago
Scientists assign each kind of organism a universally accepted name in the system known as:.
Viefleur [7K]

Answer:

Binomial nomenclature.

Explanation:

What is Binomial nomenclature?

a system for giving each organism a two-word latin name that consists of the genus name followed by the specifies name taxonomy.

4 0
2 years ago
Read 2 more answers
Other questions:
  • In the past, how have you approached problems that you received with little or inadequate instruction/guidance?
    8·2 answers
  • The study of how individuals, institutions, and society make choices under the conditions of scarcity is what?
    14·2 answers
  • .
    11·1 answer
  • Semiautomatic process has a fixed cost of $40,000 per year and variable cost of $30 per unit. An automatic process has fixed cos
    8·1 answer
  • Mariah Company has inventory at the end of the year with a historical cost of $ 95 comma 000. Mariah Company uses the perpetual
    8·1 answer
  • James is employed by a large corporation with 400 employees. The corporation provides its employees with a no-cost gym membershi
    9·1 answer
  • Which NIMS structure develops, recommends, and executes public information plans and strategies?
    14·1 answer
  • In the month of November, Oriole Company Inc. wrote checks in the amount of $10,410. In December, checks in the amount of $11,07
    15·1 answer
  • Klein Company issues a four-year note in exchange for a license agreement with fair value of $100,000. The contract requires pay
    9·1 answer
  • A shift towards a higher proportion of sales of products with a higher contribution margin per unit will most likely result in a
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!