Tangerine Corporation is considering a property distribution to its shareholders. If appreciated property is to be used, does it matter to Tangerine whether the property distributed is a long-term capital asset or property subject to depreciation recapture? Would your answer differ if the property distributed has a fair market value less than the adjusted basis? Explain.

Tangerine Corporation is considering a property distribution to its shareholders. If appreciated property is to be used, does it matter to Tangerine whether the property distributed is a long-term capital asset or property subject to depreciation recapture? Would your answer differ if the property distributed has a fair market value less than the adjusted basis? Explain.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 9DQ

See similar textbooks

Similar questions

All of the following statements are true, except: * a. When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered b. Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident c. Donation of PPE should be recorded at the fair value of the donated asset d. When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values.
All of the following statements are true, except: When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values. Donation of PPE should be recorded at the fair value of the donated asset Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident
If the entity uses the fair value model for investment property, which statement is true? a. The entity should value the property at cost less accumulated depreciation and impairment. b. The entity does not record depreciation on the investment property. c. The entity depreciates the equipment using normal depreciation method d. The entity should report the increase in fair value in other comprehensive income for the period.
If an entity was not able to determine the fair value of both the asset received and the asset given up, which is used in measuring the cost of the asset received? Group of answer choices fair value of the asset given up. fair value of the asset received. either fair value of the asset given up or carrying value of the asset given up carrying value of the asset given up
If a company uses the fair value model to value investment property, changes in the fairvalue of the asset are least likely to aff ect:A. net income.B. net operating income.C. other comprehensive income.
If a company purchases a limited-life intangible asset, they _____________ amortize the asset and they should test the asset for impairment using_______________ a.) should; the recoverability test and then the fair value test. b.) should not; the fair value test only. c.) should; the fair value test only. d.) should not; the recoverability test and then the fair value test.
Which one of the following is not true concerning the treatment of investment properties under LKAS 40? Select one: a. If an investment property is held at fair value, this must be applied to all of the entity's investment property. b. A gain or loss arising from a change in the fair value of an investment property should be recognized in other comprehensive income c. Following initial recognition, investment property can be held at either cost or fair value d. An investment property is initially measured at cost, including transaction costs.
What is the amount realized in a transaction? The gain on the sale of an asset The proceeds less the basis The sum of any money received plus the fair market value of other property received The portion of the gain that is recognized
When a firm disposes of a capital asset, the difference between the net book value of the asset and the sale proceeds is: Select one: a. A special gain or loss b. An ordinary gain or loss c. A gain or loss from a discontinued operation d. A gain or loss from a prior period e. None of the aboe try to maintain plagiarism
Under IFRS, which of the following statements describes the fair value model for accounting for investment properties? Question 12 options: a) All investment properties are remeasured at fair value at each reporting date. b) Depreciation is recorded over the investment property’s useful life. c) Gains or losses arising from changes in fair value are recognized in other comprehensive income in the period in which they arise. d) Accumulated gains and losses are recognized in profit or loss in the period in which the investment property is derecognized.
Grape Corporation makes a nonliquidating distribution of appreciated property to its shareholders. The shareholders will report a gain. The shareholders will report dividend income equal to the basis of the property distributed. The corporation will report a gain. The corporation will report dividend expense equal to the fair value of the property distributed.
Which of the following statements regarding the acquisition of PP&E is false? A. For a self constructed asset, capitalized interest can exceed actual interest cost. B. If a long-lived asset is acquired and will be paid over a number of years, the time value of money should be considered. C. The general rule of PP&E valuation is to value the asset received at the fair market value of what was given up. D. The acquisition cost of land should include all things that prepared it for it's use including excavation. In interest capitalization related to self constructed assets, all of the following must occur before the capitalization window begins except: A. Expenditures for the assets have been incurred B. Depreciation of the asset being built has been recognized C. Activities that are necessary to get the asset ready for its intended use are in progress D.Interest has to be incurred