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On June 15, 2021, Allen sold land held for investment to Stan for $65,000 and an installment note of $300,000 payable in five eq

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The amount of gain that will be recognized in 2021 under the installment method, is $27, 857 . 14

<h3>How to find the gain recognized?</h3>

First, find the profit margin on the land sold by Allen to Stan:
= ( Selling price of land - Allen's basis in the land) / Allen's basis in the land

= ( ( 300, 000 + 65, 000) - 255, 500) ) / 255, 500

= 109, 500 / 255, 500

= 42. 857 %

The gain to be recognized, using the installment method is:
= Profit margin x Amount paid by Allen in 2021

= 42. 857 % x $ 65, 000

= $27, 857 . 14

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3 0

1 year ago

Last year, XYZ Corporation incurred the following expenditures in the development of a new plant process:

vladimir1956 [14]

Answer:

$50,400

Explanation:

Amount

Salary $250,000

Materials $90,000

Utilities $20,000

Depreciation <u>$18,000</u>

Research and experimental costs <u>$378,000</u>

Current deduction = $378,000/60 * 8(May-December)

Current deduction = $50,400

8 0

3 years ago

Which of the following actions is least likely to help prevent and detect schemes involving fraudulent invoices from non-accompl

Valentin [98]

Answer: C. Matching all bank statement items to canceled checks.

Explanation: To help prevent and detect schemes involving fraudulent invoice and non accomplice vendors, matching all bank statement items to canceled checks is the right option to go with.

This action have proved to be effective and to at least prevent fraudulent invoice by vendors.

7 0

3 years ago

Read 2 more answers

Chavin Company had the following results during August: net operating income, $250,000; turnover, 5; and return on investment (R

sergeinik [125]

Answer: D. $1,315,789

Explanation:

Return on Investment = Net operating income/ Average operating assets

Average return on Assets will therefore be;

= Net Operating Income/ Return on Investment

= 250,000/0.19

= $1,315,789.47

= $1,315,789

7 0

3 years ago

Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.3 percent, a YTM of 7.3 percent, and has 18

Natali [406]

The figure for the par value of bond is wrong. The correct figure is $1000. The complete question is,

Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.3 percent, a YTM of 7.3 percent, and has 18 years to maturity. Bond Y is a discount bond making semiannual payments. This bond has a coupon rate of 7.3 percent, a YTM of 9.3 percent, and also has 18 years to maturity. Assume the interest rates remain unchanged and both bonds have a par value of $1,000.

What are the prices of these bonds today?

Answer:

a)

The current price of Bond X is $1198.60

b)

The current price of Bond Y is $826.82

Explanation:

The bond's price is calculated as the sum of the present value of the annuity of interest payments by the bond and the present value of the face value of the bond that will be received at maturity. The discount rate used to calculate the present values is the market interest rate or YTM.

As both the bonds are semiannual bonds, we will use the semi annual coupon payment, the semi annual percentage of YTM and the number of semi annual periods outstanding.

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Semi annual coupon payment = 1000 * 0.093 * 6/12 = $46.5

Number of semiannual periods till maturity = 18 * 2 = 36 periods

Semi annual YTM rate = 7.3% / 2 = 3.65%

Price of bond = 46.5 * [ (1 - (1+0.0365)^-36) / 0.0365 ] + 1000 / (1+0.0365)^36

Price of bond = $1198.6002 rounded off to $1198.60

Semi annual coupon payment = 1000 * 0.073 * 6/12 = $36.5

Number of semiannual periods till maturity = 18 * 2 = 36 periods

Semi annual YTM rate = 9.3% / 2 = 4.65%

Price of bond = 36.5 * [ (1 - (1+0.0465)^-36) / 0.0465 ] + 1000 / (1+0.0465)^36

Price of bond = $826.819 rounded off to $826.82

8 0

3 years ago