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gogolik [260]
3 years ago
9

Jay sold three items of business equipment for a total of $300,000. None of the equipment was appraised to determine its value.

Jay's cost and adjusted basis for the assets are as follows: Col1 Asset Skidder Driller Platform Total Col2 Cost $230,000 120,000 620,000 $970,000 Col3 Adjusted Basis $40,000 60,000 0 $100,000 Jay has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $300,000 to the buyer in this arm’s length transaction.How would Jay allocate the sale price and figure the gain or loss on the sale of the three assets?
Business
1 answer:
olasank [31]3 years ago
6 0

Answer:

Consider the following calculations

Explanation:

Step 1. Given information.

Asset        Cost        Adjusted Basis

--------------------------------------------------

Skidder   230,000      40,000

Driller       120,000      60,000  

Platform  620,000        0

-------------------------------------------------

Total         970,000      100,000

Step 2. Formulas needed to solve the exercise.

Allocation for each asset =  value sold * (adjusted basis / total)

Gain on sale = Sales price - Adjusted basis amount

Step 3. Calculation and Step 4. Solution.

Sales price is allocated on the basis of adjusted value.

  • Skidder = 300.000 * 40.000/100.000 = 120.000

  • Driller = 300.000*60.000/100.000 = 180.000

  • Platform = 300.000*0/100.000 = 0

Gain on sale = Sales price - Adjusted basis amount

                        = 300.000 - (40.000 + 60.000 + 0)

                        = 200.000

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klasskru [66]

Answer:

The future value is $6,894.21

Explanation:

Giving the following information:

Dominic Joseph deposits $5,000 in a new savings account. The account pays 5.5 percent interest compounded annually.

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

PV= 5,000

i= 0.055

n=6

FV= 5,000*(1.055)^6= $6,894.21

5 0
3 years ago
An annual has 15 years to maturity. It has a coupon rate of 5%, a YTM of 8%. Fill in the cells highlighted in yellow, and aswer
grin007 [14]

Answer:

Market value at 8% YTM  $ 743.2156

at 10% YTM                       $ 619.6960

Explanation:

Assuming the face value is 1,000 as common outstanding American company's bonds:

Market value under the current scenario:

<u>Present value of the coupon payment:</u>

<u />

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

Coupon: $1,000 x 5% =  50

time 15 years

rate 0.08

50 \times \frac{1-(1+0.08)^{-15} }{0.08} = PV\\

PV $427.9739

<u>Present Value of the Maturity</u>

<u />

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   15.00

rate  0.08

\frac{1000}{(1 + 0.08)^{15} } = PV  

PV   315.24

PV c $427.9739

PV m  $315.2417

Total $743.2156

If the interest rate in the market increaseby 2% then investor will only trade the bonds to get a yield 2% higher that is 10% so we recalculate the new price:

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 50.000

time 15

rate 0.1

50 \times \frac{1-(1+0.1)^{-15} }{0.1} = PV\\

PV $380.3040

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   1,000.00

time   15.00

rate  0.1

\frac{1000}{(1 + 0.1)^{15} } = PV  

PV   239.39

PV c $380.3040

PV m  $239.3920

Total $619.6960

Giving a lower price than before

3 0
3 years ago
Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incu
fenix001 [56]

Answer:

156.6%

Explanation:

Given:

Cosi Company's Incurred over head for the next period = $830,000

Expected labor hours = 53,000

Cost of labor = $10.00 per hour

Thus,

Total labor cost = 53,000 × $10.00 = $530,000

Now,

the Cosi Company's predetermined overhead rate will be calculated as:

Predetermined overhead rate =  Incurred overhead / Total labor cost

on substituting the respective values, we get

Predetermined overhead rate = ( $830,000 / 530,000 ) = 1.566

or

Predetermined overhead rate = 1.566 × 100% = 156.6%

4 0
3 years ago
David Ricardo, a nineteenth-century economist, wrote, "The price of corn is high not because a rentis paid, but a rent is paid b
pishuonlain [190]

Answer:

The correct answer is the option 3: if the price of corn rises because of increased demand for corn, land rents will rise to absorb most of the extra revenue received by tenant corn farmers.

Explanation:

To begin with, in David Ricardo's statment it is established that ''the rent is paid because the price of the corn is high'' therefore it is understandable that it is stated that <em><u>the price of the corn is not a cause of the rent but it is the opposite</u></em>, the price causes the rent due to the fact that <u><em>the rent is not a cost</em></u> that has to go within the price but the price goes first and then the rent happens. Therefore that if there it an increase in the population and that causes and<em> increase in the demand of the corn, then the price will rise and consequently the rent will rise</em> to in order to obtain the most of the extra revenue that it can.

6 0
3 years ago
I can only put away $2,000 a year toward retirement. I am 25 and plan on retiring at 65 and earning 5%. How much will I have at
Scorpion4ik [409]

Answer: $241,600

Explanation:

As this amount is a constant amount, it is an annuity. To find out the total amount after a certain period of time, use the future value of annuity formula.

Future value of annuity = Amount * [ {( 1 + rate) ^number of periods - 1} / rate]

Number of periods = 65 - 25 = 40

Future value of annuity = 2,000 * [ {(1 + 5%)⁴⁰ - 1} / 5%]

= 241,599.54

= $241,600

3 0
3 years ago
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