Answer:
Loss to be recognized is $25000
Explanation:
Liquidation refers to a process whereby a company's operation come to an end, which leads to distribution of assets and liabilities to the claimants and winding up the business.
A company may be forced to liquidate owing to consistent losses. In such cases, the claims of all the stakeholders cannot be satisfied and they receive pro-rata basis allocation which covers everybody's claim to an extent, if not fully.
In the given case,
Robert's receipt is Land. Liabilities attached to the land being $325,000 while the land has fair market value of $400,000.
Thus, after assuming the liability, Robert's actual realized amount is,
$400,000 - $325,000 = $75,000
Since, the land was received in consideration for discharge of Robert's own share in company amounting to $100,000.
Thus, Gain/Loss to be recognized by Robert = $75, 000 (receipts) - $100,000
= - $25,000
i.e Robert should recognize a loss of $25,000.
