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lakkis [162]
2 years ago
7

A property is being appraised using the income capitalization approach. Annually, it has potential gross income of $40,000, vaca

ncy and credit losses of $3,500, and operating expenses of $16,000. Using a capitalization rate of 8%, what is the indicated value (to the nearest $1,000)?
Business
2 answers:
luda_lava [24]2 years ago
6 0

Answer:

<em>Value $  256,250</em>

<em>rounding against nearest 1,000 dollar: 256,000</em>

<em />

Explanation:

From the gross income we subtract the expenses and vanacy losses.

40,000 gross income - 3,500 vacancy - 16,000 operating expense

20,500 net

<em />

Now, we solve for the present value of a perpetuity given the capitalziation rate of 8%

$ 20,500 /  0.08  =  <em>$  256,250</em>

Anton [14]2 years ago
5 0

Answer: $256,000

Explanation:

Given the following ;

Gross income = $40,000

Vacancy and credit losses = $3,500

Operating expenses = &$16,000

Capitalization rate = 8%

Using the income capitalization approach, property is valued based based on the revenue which it could potentially generate. These includes property which could be leased, whereby money is generated from lease amount.

Cost incurred is deducted from revenue to get the net income

Net income = Gross income - cost incurred

Gross income - (Vacancy or credit losses + operating expense)

$40,000 -($3,500+$16,000)

$40,000 - $19,500 = $20,500

Net income = $20,500

Net income ÷ capitalization rate

$20,500 ÷ (8÷100)

$20,500 ÷ 0.08 = $256,250

Indicated value = $256,000 (to the nearest 1000 dollar)

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Here, Steve's casualty loss will be gotten when we compare both his adjusted basis and the fair market value and then we choose the lesser one. Since $35000 is lesser than $50000, therefore the answer will be $35000.

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On April ​3, a customer returned $ 900 of merchandise that had been purchased with cash to Cooke Supplies. Cooke​'s cost of the
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Answer:

The Journal entries are as follows:

(i) Sales revenue A/c  Dr. $900

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Note:

(1) At the time of sale, the cash would have been debited with the amount of $900 and the sales revenue would have been credited with the amount of $900. Now, the cash of $900 should be credited as it was debited earlier.

(2) The inventory account also credited at the time sale, so it should be debited and the cost of goods sold debited at the time of original sale, so it need to be credited.

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3 years ago
How is a savings account most useful?
Ksenya-84 [330]

The fourth answer is correct (D).

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3 years ago
Grady is a member of a large family and received the following payments this year. For each payment, determine whether the payme
diamong [38]

Answer:

a. This is a realized income. Amount to be included in his gross income is $0.

b. This is a realized income. Amount to be included in his gross income is $0.

c. This is a realized income. Amount of gift of bond to include in Glady's gross income is $0. Amount of interest from the bonds to be included in his gross income is $0.

d. This is NOT a realized income. Amount to be included in his gross income is $0.

Explanation:

a. A gift of $30,600 from Grady’s grandfather. Amount to be included?

The $30,600 is categorized as a realized income. However, no part of the total amount of any gift will be included in the gross income.

Therefore, amount to be included Glagy's gross income is $0.

b. 680 shares of GM stock worth $282 per share inherited from Grady’s uncle. The uncle purchased the shares for $82 each, and the shares are worth $287 at year-end. Amount to be included?

This amount of inheritance is categorized a realized income. However, they are not to be included as part of the gross income.

Although the there is an increase in the share value from $82 to $287, but the increased value will still not be included in the gross income because it has not been realized.

Therefore, amount to be included Glagy's gross income is $0.

c. A gift of $53,000 of Ford Motor Bonds. Grady received the bonds on October 31, and he received $1,590 of semiannual interest from the bonds on December 31. Amount to be included for gift motor bonds? Amount to be included for interest from the bonds?

This gift of bond is categorized as a realized income. However, they are not to be included as part of the gross income.

The amount of interest that accrued till October 31 will not be included in the gross income because it is considered as part of the gift as it was an interest that accrued when the bond gift was given.

The $530 [i.e ($1,590 / 6 months) * 2 months] that accrued from November 1 to December 31 (i.e. 2 months) will be taxed because it accrued after the day the gift was given. But this is an accrued interest that has not been received. It will therefore not be included in the gross income but it will be taxed when it is received.

The amount of gift of bond = $53,000 + [($1,590 / 6 months) * 4 months] = $53,000 + $1,060 = $54,060.

Amount of accrued interest from the bonds = ($1,590 / 6 months) * 2 months = $530.

However, amount of gift of bond and interest from the bonds to be included in Glady's gross income is $0.

d. A loan of $7,200 for school expenses from Grady’s aunt. Amount to be included?

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For this qustion, the loan is considered a genuine loan and it not a realized income. Therefore, the amount to be included Glagy's gross income is $0.

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