Use the following facts for questions 4-6. Rearden Co. has the plant assets shown below. AssumeRearden Co. depreciates in all years on the basis of the nearest full month.Machine AMachine BBuildingOriginal cost$640,000$390,000$2,000,000Date purchased7/1/1310/1/121/1/05Useful life20 years8 years20 yearsSalvage value$40,000$30,000noneDepreciation methodDouble-declining balanceSum-of-the years'-digitsStraight-lineAccum. Depr.Through 12/31/ 2014$92,800$165,000$1,000,000 If Rearden sold the building on April 1, 2015 for $920,000 cash, what is the amount of gain orloss that should be recognized on the date of sale? Numbers with brackets indicate (loss).A. ($80,000)B. $55,000C. ($55,000)D. $80,0006.

If Rearden sold the building on April 1, 2015 for $920,000 cash, what is the amount of gain or loss that should be recognized on the date of sale? Numbers with brackets indicate (loss). A. ($80,000) B. $55,000 C. ($55,000) D. $80,000

If Rearden sold the building on April 1, 2015 for $920,000 cash, what is the amount of gain or loss that should be recognized on the date of sale? Numbers with brackets indicate (loss). A. ($80,000) B. $55,000 C. ($55,000) D. $80,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 3RE: Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not...

See similar textbooks

Related questions

Q: Wyoming Real Estate purchased a building for $600,000 in 2002. At the end of 2014, when it had a…

A: Ans. An appraised value is the estimated worth of an asset by an expert. In most cases it is close…

Q: On January 1, 2016, Gecho Corporation purchased computer equipment for $23,000. The equipment has an…

A: Solution: depreciation rate - SLM = 1/4 = 25% Depreciation rate - DDB = 25%*2 = 50% Depreciation for…

Q: Mr. Briggs purchased an apartment complex January 10, 2016 for $6,000,000 with 20% of the price…

A: Answer:

Q: On July 15, 2016, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for…

Q: lbatross Corporation acquired land for investment purposes in 2005 at a cost of $100,000. Albatross…

A: Gross profit + selling price = Gross profit percentage i.e. $ 300, 000 ( gross profit ) ÷$ 400,000 (…

Q: Randall Corporation (a C Corporation) acquires an apartment building for $200,000 on September 1,…

A: As per IRS rules you can depreciation apartment builidng used for business as…

Q: The Fisher Company purchased a machine on October 1, 2018, for $18,000. At the time of acquisition,…

A: Depreciable cost=Cost-Salvage value=$18,000-$5,000=$13,000

Q: Maxine Corporation purchased an investment property on January 1, 2017 for a cost of $2,200,000. The…

A: Depreciation expense is related to the drop in the value of an asset periodically because of the…

Q: On July 1, 2015, Karen Company purchased equipment for $325,000; the estimated useful life was 10…

A: Annual Depreciation = (Cost of the assets - Salvage value) / life of the assets = ($325000 - $40000)…

Q: On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line…

A: Deferred tax: Deferred taxes are taxes that will be paid in future period. Deferred tax is a…

Q: Lopez acquired a building on June 1 2014 for 1,000,000. Compute the depreciation deduction assuming…

A: Given that, Lopez acquired a building on June 1 2014 for 1,000,000 To calculate - Lopez's cost…

Q: Taylor Company purchased a machine for $9,800 on January 1, 2016. The machine has beendepreciated…

A: Annual Depreciation = (Cost of the assets - Salvage value) / life of the assets = ($9,800 - $1,400)…

Q: On January 1, 2017, Salina Company purchased land and a building for $2,240,000. At the time of the…

A: The expense incurred should be capitalised, of it would provide benefits for the long period.

Q: Mickelson Inc. owns land that it purchased on January 1,2000, for $450,000. At December 31, 2017,…

Q: On January 4, 1986, Rita Racksaw purchased a warehouse for $150,000. In 2020, she sold the warehouse…

A: Section 1231 is formulated for the real and depreciable business properties. Section 1231…

Q: 5.The Jones Corp. purchased an investment property on Jan 1, 2017 for a cost of P220,000. The…

A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…

Q: Suppose GENERAL MILLS sold a building for $120 million on June 1, 2021. GENERAL MILS originally…

A: If a fixed asset is sold, then gain or loss arises on the sale of such fixed asset is recorded as…

Q: rtgage value - P12,000,000 Independent appraiser's value BIR -P10,000,000 Commisioner's Zonql…

A: Capital gain tax refers to the mandatory tax levied by the government over the profit made by the…

Q: At the beginning of 2015, Pitman Co. purchased as asset for $1,200,000 with an estimated useful life…

A: Straight line depreciation=Cost-Salvage valueUseful life=$1,200,000-$200,0005=$200,000

Q: Blakemore, Inc. purchases and places in service a commercial real estate property in February, 2021…

A: Real estate depreciation is a complicated tax reduction for real estate investors and it not to be…

Q: On January 1, 2011, Sam Johnson acquired depreciable real property for $50,000. He used…

A: Capital gain The amount of increment in the value of capital assets and will be realized on account…

Q: Clementine bought the following assets on 1 June 2016, and sold them on the 30th of June 2020: I…

A: Capital gain or capital loss is incurred on the sale of capital asset of an individual. Capital gain…

Q: On January 1, 2011, Sam Johnson acquired depreciable real property for $50,000. He used…

A: Solution: Coast of the property = $50,000 Accumulated depreciation for 9 years as on jan 3, 2020 =…

Q: In January 1, 2015, Fun company purchased Company A for $40,000 in cash and paid immediately. Fun…

A: It is assumed that there is a typo in the question and the question is asking about the annual…

Q: Required: (round all dollars amounts to the nearest whole dollar, and round the diminishing balance…

A: Depreciation: A reduction in the value of fixed asset pertaining to a charge is known as…

Q: Bremer Company made the following exchanges of assets during 2019: Jan. 1 Acquired a more advanced…

A: The journal is prepared to record day to day financial transactions of the business. The assets and…

Q: Required: Prepare all required journal entries for annual depreciation and revaluation for 2014 to…

A: Asset revaluation: Asset revaluation can be defined as any deflection in the value of asset which…

Q: On May 1, 2020, Zoo Company sells furniture for 80,000 cash. The furniture originally cost 200,000…

A: Here in this question, we are required to calculate the gain or loss to be recognized on sale of…

Q: The Jordan Corp (C Corporation), a calendar year taxpayer, sold a piece of equipment, a piece of…

A: As this is a multi part questions and based on our policy we are answering first 3 part if you want…

Q: On January 1, 2014, Tanaka, Inc. purchased equipment for $27,000. Tanaka uses straight-line…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

Q: Turtle Corporation is a calendar year C Corporation formed in 2017. Turtle purchased a motel…

A: Allowable deprecation deduction in US is computed based on MACRS depreciation rate. As per MACRS…

Q: Sadaf Oman Company purchased a land for RO 250,000 in 2010. In October 2020, the company sold this…

A: Financial position refers to the current status of company assets & liabilities. It helps in…

Q: Sadaf Oman Company purchased a land for RO 250,000 in 2010. In October 2020, the company sold this…

A: Non-current assets are the company's tangible or long term investments which can't be converted into…

Q: Wavemasters Inc., owns an 80% interest in Sayner Development Company. In a prior period, Sayner…

A: JOURNAL Date Particular L.F. Debit (in $) Credit (in $) Gain on sale of building…

Q: On 15 January 2020, Dell & Co. sold land that cost P90,000 for P120,000. The balance of the land…

A: Cash flow from investing activities: It is a section of the cash flow statement that shows the cash…

Q: Zaki LLC purchased computer equipment (five-year property) on April 20, 2018, for $36,000 and used…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: On June 1, 2015, Skylark Enterprises (not a corporation) acquired a retailstore building for…

A: The section 1231 depicts real property of business that remains in the possession for more than the…

Q: On May 1, 2018, Crane Company sells office furniture for $303600 cash. The office furniture…

A: From January 1, 2011 to May 1, 2018 = 7 years 4 months or 88 months Annual Depreciation = ($737200…

Q: On November 4, 2020, GT Corporation sells a piece of its equipment. GT Corporation had initially…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…

Q: Bennie Razor Company has decided to sell one of its old manufacturing machines on January 1, 2020.…

A: Loss on sale of assets is the difference between carrying value of assets and sale value of assets.

Q: Mickelson Inc. owns land that it purchased on January 1, 2000, for $450,000. At December 31, 2014,…

A: The Company owns land that it purchased on January 1, 2000, for $ 450,000. At December 31, 2014,…

Q: On January1, 2000, Luke bought a RAV4 worth P900,000 and intend to sell it for P300,000 after its…

A: Thew question is based on the concept of Depreciation Accounting.

Q: On December 31, 2020, Listach Inc. sold a used industrial crane for $600,000 cash. The original cost…

A: Formula: Gain or loss on sale of Asset = Sale value - Book value

Q: On January 1, 2014, Sharon Company, a 60% owned corporation of Polly Company, sells a building with…

A: For calculating non controlling interest in net income , we need to eliminate the inter company…

Q: Jasmin Company purchased an investment property on January 1, 2017 at a cost of P2,200,000. The…

A: Cost of investment property = 2200000 Use ful life = 40 years Deprecation for 2 years =2200000/40…

Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

If Rearden sold the building on April 1, 2015 for $920,000 cash, what is the amount of gain or
loss that should be recognized on the date of sale? Numbers with brackets indicate (loss).
A. ($80,000)
B. $55,000
C. ($55,000)
D. $80,000
6.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a straight-line basis over a useful life of 10 years and used a residual value of $12,000. Chapmans depreciation expense for 2019 was $11,000. What was the original cost of the building? a. $98,000 b. $110,000 c. $122,000 d. $134,000
When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.
On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
Susquehanna Company purchased an asset at the beginning of the current year for 250,000. The estimated residual value is 25,000. Susquehanna estimates that the asset will be used for 10 years and uses straight-line depreciation. Calculate the depreciation expense per year.