AFM Holdings Co. purchased 15 acres of land with an office
building and warehouse on it...
AFM Holdings Co. purchased 15 acres of land with an office
building and warehouse on it for $2,000,000. The assets were
appraised at: land $1,000,000, building $600,000, and warehouse
$900,000. The assets were carried on the seller's books at: land
$800,000, building $500,000, and warehouse $700,000. At what cost
should the purchasing company record each of the assets?
Land, Building, Warehouse:
a. $1,000,000, $600,000, $900,000
b. $800,000, $480,000, $720,000
c. $800,000, $500,000, $700,000
d. $1,000,000, $500,000, $500,000
J Ltd.’s office building was destroyed by fire in the current
year. The building’s original cost...
J Ltd.’s office building was destroyed by fire in the current
year. The building’s original cost was $280,000 and the class 1 UCC
balance at the beginning of the year was $200,000. The building was
insured for its market value of $350,000. A new building costing
$400,000 was constructed 18 months after the fire. What is the
minimum recapture of CCA for tax purposes in the current
year?
During the current year M sold all of her class 10 property to Q
Inc., a...
During the current year M sold all of her class 10 property to Q
Inc., a corporation controlled by M. The property, which originally
cost $106,000, was valued at $30,000. The UCC of class 10 at the
beginning of the current year was $50,000. What is the amount of
the decrease to M’s net income for tax purposes, if any, for the
current year as a result of the sale of the class 10
property?
Assume a property (land and building) sold three years ago for
$500,000. Further assume that real...
Assume a property (land and building) sold three years ago for
$500,000. Further assume that real estate values have increased 4%
per year since then. Assume that the land in currently worth
$150,000 and that the replacement cost for the existing
improvements is $700,000. Finally assume that the current
improvments are half-way through their economic service life. 1)
Estimate the current value of the building based on its prior sale.
2) Estimate the current value of the building based on...
Matrix Inc. borrowed $1,000,000 at 8% to finance the
construction of a new building for its...
Matrix Inc. borrowed $1,000,000 at 8% to finance the
construction of a new building for its own use. Construction began
on January 1, 2016, and was completed on October 31, 2016.
Expenditures related to this building were: January 1 $258,000
(includes cost of purchasing land of $150,000) May 1 310,000 July 1
420,000 October 31 275,000 In addition, Matrix had additional debt
(unrelated to the construction) of $500,000 at 9% and $800,000 at
10%. All debt was outstanding for the...
At the beginning of current year, ABC sold a building and
immediately lease it back. The...
At the beginning of current year, ABC sold a building and
immediately lease it back. The following data pertain to the sale
and leaseback transaction:
Sale price at above fair
value
9,000,000
Fair value of
building
8,000,000
Carrying amount of
building
7,200,000
Annual rental payable at the end of each
year
600,000
Remaining life of
building
20 years
Lease
term
4 years
Implicit interest
rate
12%
PV of an ordinary annuity of 1 at 12% for 4
periods
3.037
REQUIRED:...
Stellar Furniture Company started construction of a combination
office and warehouse building for its own use...
Stellar Furniture Company started construction of a combination
office and warehouse building for its own use at an estimated cost
of $2,500,000 on January 1, 2020. Stellar expected to complete the
building by December 31, 2020. Stellar has the following debt
obligations outstanding during the construction period.
Construction loan-12% interest,
payable semiannually, issued December 31, 2019
$1,000,000
Short-term loan-10% interest,
payable monthly, and principal payable at maturity on May 30,
2021
700,000
Long-term loan-11% interest,
payable on January 1 of...
On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par...
On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par common stock) of Mantz
Corporation (MC) for $2,500,000 in cash. The acquisition date fair
value of the noncontrolling interest’s shares (40 percent) was $40
per share. JC uses the Initial Value Method for its internal
accounting.
At the time of the acquisition MC has the following
asset and liability accounts:
Book Value Fair Value Difference
Current Assets $ 500,000 $ 500,000 $ 0
PPE...
Tiger Industrial Inc. purchased a 20 acre tract of land and two
buildings (building #1 and...
Tiger Industrial Inc. purchased a 20 acre tract of land and two
buildings (building #1 and
building #2) for $1,000,000. The market value of the land is
$700,000 and the market
value of building #1 is $350,000. Building #2 was condemned and
had no market value.
The company plans to raze Building #2 and construct a new
building (Building #3) on the
site. In addition to the purchase price, the company made
(received) the following
expenditures (income) in the fiscal...
During the current year, Stigma Corporation distributes the
assets listed below to its sole shareholder,Jessica. Assume...
During the current year, Stigma Corporation distributes the
assets listed below to its sole shareholder,Jessica. Assume that
Stigma has an E&P balance exceeding the amount distributed and
is subject to a 34% marginal tax rate. Unless stated otherwise,
adjusted bases for taxable income and E&P purposes are the
same.
Requirement
For each asset listed, determine the gross income recognized by
Jessica,her basis in the asset, the amount of gain or loss
recognized by Stigma,and the effect of the distribution on...