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Marina CMI [18]
3 years ago
13

Pronghorn Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer worth $3,498. Pr

onghorn also paid $530 in the transaction. Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance.
Business
1 answer:
lana [24]3 years ago
6 0

Answer:

Truck:

Cost = $20,000

Accumulated depreciation = $18,000

Small computer worth = $3,498

Paid in transaction = $530

The Journal entry is as follows:

Equipment/Computer A/c                       Dr. $3,498

Accumulated depreciation-Truck  A/c   Dr. $18,000

To Truck                                                                        $20,000

To Gain on disposal of truck                                        $968                                        

To cash                                                                          $530

(To record the exchange)

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Answer:

Assets                  FMV                  Adjusted Basis       Built-in Gain

Cash                    $200,000         $200,000               $0

Inventory             $80,000           $40,000                  $40,000

Land and Bldg    $220,000         $170,000                 $50,000

total                     $500,000

A) Since SOA is making a liquidating distribution, it will be taxed as if they sold their assets at fair market value:

  • distribution of the inventory results in a $40,000 ordinary gain = $40,000 x 30% = $12,000 in taxes
  • distribution of the land and building results in a $50,000 Sec. §1231 gain = $50,000 x 30% = $15,000 in taxes

total recognized gain = $90,000 (= $40,000 + $50,000)

B) After taxes are paid, SOA's total assets = $500,000 - $27,000 = $473,000 which must be divided equally between Kevin and Bob. Each owner should receive $236,500.

So Kevin's gain = $236,500 - $100,000 = $136,500

8 0
3 years ago
Which of the following would be purchased with an individual's discretionary income?
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A new CD is the correct answer.

Explanation:

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many say that companies have a right to drug-test their employees because drug use impairs an employee's performance. how do des
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The impairment brought on by stress or other factors is not tested during random testing.Employees are subjected to random exams, which are probably inspections of their physical conditions to determine whether they are drug users and how their bodies have been impacted by drugs to the point where they are unable to perform their regular jobs.

Employees who are discovered to be using illicit drugs receive warnings and are fired from their positions.Any unannounced, without prior notice chemical screening for the presence of typically illicit narcotics in a sample of one's blood, hair, or urine is known as a "random drug test."Being unexpected and without prior notice, it is random. This is done to weed out workers who use heavy drugs, which frequently renders them ineffective or ineligible for employment.

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7 0
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Imagine that you are a parent, and your child is going to college in 4 years. Tuition fees amount to $16,000 a year for each of
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Answer:

lump sum money= $52653

Explanation:

Giving the following information:

Your child is going to college in 4 years.

Tuition fees amount to $16,000 a year for each of the 4 years.

You plan on depositing a lump sum of money today in a bank account paying 5% interest a year.

The first tuition fee payment you make will be 4 years from now.

FV= 16000*4= $64000

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i= 0.05

We need to find the annual payments:

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Developing nations currently account for ________ of FDI in the form of cross-border mergers and acquisitions. Group of answer c
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