<u>Answer:</u> The amounts have to be determined using fair value for plant and equipment and for long term debt.
<u>Explanation:</u>
Fair value method is based on the market price of the asset. The historical value of the assets is not used to consider the sale price of the asset. Fair value is where Company J and Company K both the parties have to accept the price based on the known facts of the assets.
Company J and Company K should both accept the price out of free will and should not be out of compulsion. Company J can report based on the financial statement fair value of the assets and long term debt.
The best time to do it is during a Holiday or break from school during your junior or senior year so you don’t miss class and you can take your time to truly see the campus
Answer:
$0 stock basis; $10,000 debt basis
$1,000 (original stock basis) + $4,000 ordinary income − $7,000 distribution = $0 stock basis and a $2,000 distribution in excess of stock basis generating $2,000 of capital gain. Debt basis is not reduced by distributions.
Explanation:
Answer:
Operating loss will decrease by $20,000
Explanation:
Operating loss from normal business activities and if the division is not shut down = $150,000.
Operating loss if division is shut down by the management = $130,000 ($480,000 - $350,000) because the management has determined that $350,000 of the $480,000 Fixed Costs shown would be eliminated if that happens.
So, if the Northern Division is shutdown, the Operating loss will decrease by $20,000 (From $150,000 to $130,000)
