Mrs. Ryes, a sole proprietor doing business under the trade name “Cheesy Cakes’, had seen her business booming because of the introduction of the hit flavor Red Macaroon Velvet Cakes. However, a series of natural disasters and misinformed business decisions had caused Mrs. Ryes to suffer losses, the details of which follow: An equipment with book value of P400,000 that was inundated by floods. The equipment was not insured and can be repaired for P500,000 to be reusable again. Another equipment with a book value of P330,000 and a fair market value of P440,000 swept by the same flood. The equipment is totally lost and is insured only up to P100,000 Also swept in the same flood are Mrs. Reyes’ appliances inside her home. The appliances were purchased two years ago at an aggregate cost of P1,000,000 with an expected useful life of 5 years How much loss can be claimed by Mrs. Reyes as an allowable deduction?
Mrs. Ryes, a sole proprietor doing business under the trade name “Cheesy Cakes’, had seen her business booming because of the introduction of the hit flavor Red Macaroon Velvet Cakes. However, a series of natural disasters and misinformed business decisions had caused Mrs. Ryes to suffer losses, the details of which follow: An equipment with book value of P400,000 that was inundated by floods. The equipment was not insured and can be repaired for P500,000 to be reusable again. Another equipment with a book value of P330,000 and a fair market value of P440,000 swept by the same flood. The equipment is totally lost and is insured only up to P100,000 Also swept in the same flood are Mrs. Reyes’ appliances inside her home. The appliances were purchased two years ago at an aggregate cost of P1,000,000 with an expected useful life of 5 years How much loss can be claimed by Mrs. Reyes as an allowable deduction?
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 32P
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Mrs. Ryes, a sole proprietor doing business under the trade name “Cheesy Cakes’, had seen her business booming because of the introduction of the hit flavor Red Macaroon Velvet Cakes. However, a series of natural disasters and misinformed business decisions had caused Mrs. Ryes to suffer losses, the details of which follow:
- An equipment with book value of P400,000 that was inundated by floods. The equipment was not insured and can be repaired for P500,000 to be reusable again.
- Another equipment with a book value of P330,000 and a fair market value of P440,000 swept by the same flood. The equipment is totally lost and is insured only up to P100,000
- Also swept in the same flood are Mrs. Reyes’ appliances inside her home. The appliances were purchased two years ago at an aggregate cost of P1,000,000 with an expected useful life of 5 years
How much loss can be claimed by Mrs. Reyes as an allowable deduction?
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