ABC Corporation owned a business warehouse that was
destroyed by fire on October 1, 2020. On...
ABC Corporation owned a business warehouse that was
destroyed by fire on October 1, 2020. On December 1, 2020 the
corporation received an insurance payment of $900,000 for the loss.
The corporation’s basis in the warehouse just prior to the loss was
$500,000. The corporation would like to use the involuntary
conversion rules to defer as much gain as possible. Assume the
corporation built a new warehouse on the old site within the
required timeframe and incurred construction costs of...
Teresa’s manufacturing plant is destroyed by fire. The plant has
an adjusted basis of $270,000, and...
Teresa’s manufacturing plant is destroyed by fire. The plant has
an adjusted basis of $270,000, and Teresa receives insurance
proceeds of $410,000 for the loss. Teresa reinvests $420,000 in a
replacement plant.
a. Calculate Teresa’s recognized gain if she elects to utilize
the involuntary conversion provision. $
b. Calculate Teresa’s basis in the new plant.
Problem 8-21 (Algorithmic)
Involuntary Conversions (LO 8.12)
Teresa's manufacturing plant is destroyed by fire. The plant...
Problem 8-21 (Algorithmic)
Involuntary Conversions (LO 8.12)
Teresa's manufacturing plant is destroyed by fire. The plant has
an adjusted basis of $281,800, and Teresa receives insurance
proceeds of $422,700 for the loss. Teresa reinvests $443,835 in a
replacement plant within 2 years of receiving the insurance
proceeds.
If an amount is zero, enter "0".
a. Calculate Teresa's recognized gain if she
elects to utilize the involuntary conversion provision.
b. Calculate Teresa's basis in the new
plant.
Kitty’s factory building, which has an adjusted basis of
$475,000, is destroyed by fire on April...
Kitty’s factory building, which has an adjusted basis of
$475,000, is destroyed by fire on April 8, 2020. Insurance proceeds
of $500,000 are received on June 1, 2020. She has a new factory
building constructed for $490,000, which she occupies on October 1,
2020. Assuming Kitty’s objective is to minimize her current-year
tax liability, calculate her recognized gain or loss and the basis
of the new factory building.
Problem 9-07
On April 15, 2021, fire damaged the office and warehouse of
Wildhorse Corporation. The...
Problem 9-07
On April 15, 2021, fire damaged the office and warehouse of
Wildhorse Corporation. The only accounting record saved was the
general ledger, from which the balance sheet data below was
prepared.
WILDHORSE CORPORATION
MARCH 31, 2021
Cash
$21,180
Accounts receivable
38,980
Inventory, December 31, 2020
72,870
Land
36,180
Buildings
115,250
Accumulated depreciation
$44,388
Equipment
3,811
Accounts payable
24,794
Other accrued expenses
1,640
Common stock
103,800
Retained earnings
56,140
Sales revenue
139,600
Purchases
56,140
Miscellaneous expense
25,951
$370,362
$370,362...
1) Oscar Olson, single, purchased a residence on February 19,
2017, for $170,000. On September 7,...
1) Oscar Olson, single, purchased a residence on February 19,
2017, for $170,000. On September 7, 2019, a tornado completely
destroyed his home. The home was insured for its replacement value,
and homes in Oscar’s area had appreciated greatly. He received
proceeds of $400,000.
a. How much does Oscar exclude and recognize?
b. If Oscar instead had received proceeds of $525,000, how much
gain would be excluded and recognized? How much of a replacement
residence would have to...
On April 15, 2021, fire damaged the office and warehouse of
Whispering Corporation. The only accounting...
On April 15, 2021, fire damaged the office and warehouse of
Whispering Corporation. The only accounting record saved was the
general ledger, from which the balance sheet data below was
prepared.
WHISPERING CORPORATION
MARCH 31, 2021
Cash
$21,860
Accounts receivable
43,040
Inventory, December 31, 2020
77,390
Land
31,880
Buildings
118,120
Accumulated depreciation
$37,414
Equipment
3,738
Accounts payable
22,698
Other accrued expenses
35,483
Common stock
90,800
Retained earnings
56,770
Sales revenue
134,410
Purchases
56,770
Miscellaneous expense
24,777
$377,575
$377,575
The following...
On April 1, 2020, Republic Company sold equipment to its wholly
owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly
owned subsidiary, Barre Corporation, for $40,000. At the time of
the transfer, the asset had an original cost (to Republic) of
$60,000 and accumulated depreciation of $25,000. The equipment has
a five year estimated remaining life.Barre reported net income of
$250,000, $270,000 and $310,000 in 2020, 2021, and 2022,
respectively. Republic received dividends from Barre of $90,000,
$105,000 and $120,000 for 2020, 2021, and 2022, respectively.
17. What...
On April 1, 2020, Republic Company sold equipment to its wholly
owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly
owned subsidiary, Barre Corporation, for $40,000. At the time of
the transfer, the asset had an original cost (to Republic) of
$60,000 and accumulated depreciation of $25,000. The equipment has
a five year estimated remaining life. Barre reported net income of
$250,000, $270,000 and $310,000 in 2020, 2021, and 2022,
respectively. Republic received dividends from Barre of $90,000,
$105,000 and $120,000 for 2020, 2021, and 2022, respectively.
17. What...
Ivanhoe Corporation is a privately owned company that uses
ASPE. On January 1, 2020 Ivanhoe’s financial...
Ivanhoe Corporation is a privately owned company that uses
ASPE. On January 1, 2020 Ivanhoe’s financial records indicated the
following information related to the company’s defined benefit
pension plan:
Defined Benefit Obligation
$1,340,000
Pension Plan Assets
1,490,000
Ivanhoe Corporation’s actuary provided the following information on
December 31, 2020:
Current year service cost
$83,000
Prior service cost, granted Jan 1, 2020
189,000
Employer contributions for the year
94,000
Benefits paid to retirees
26,000
Expected return on assets
5%
Actual return on...