Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse...
Question:
Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $189,000. The appraised fair market value of the warehouse was $126,000, and the appraised value of the land was $149,250.
What is Bob's basis in the warehouse and in the land?
Fair Market Value :
"Fair Market Value" is the value of asset or services that the seller is willing sell and the buyer is willing to buy in the open market.The price of the assets or services decided by buyer and seller on mutual discussion.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerBob's basis in the warehouse and in the land is calculated below:
A) Bob's basis in the warehouse is as follows:
= $189,000 * $126,000/($149,250+...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
How to Record Asset Acquisition, Disposal & Impairment in Accounting
from
Chapter 11 / Lesson 2
17K
Accountants must clearly record the acquisition, disposal, and impairment of a company's or individual's assets. Review these accounting concepts specific to assets, including acquisition, basket purchases, retirement, disposal, and impairment.
Related to this Question
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $201,000. The appraised fair market value of the warehouse was $112,250, and the appr
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $117,000. The appraised fair market value of the warehouse was $135,750, and the appraised value of the land was $161,250. a. What is Bob's
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $171,000. The appraised fair market value of the warehouse was $124,500, and the appraised value of the land was $139,500. (Do not roundinte
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $140,000. The appraised fair market value of the warehouse was $100,750, and the appraised value of the land was $155,250. (Do not round int
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and a land for $130,000. The appraised fair market value of the warehouse was $119,250, and the appraised value of the land was $123,750. What would be Bob's
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $157,000. The appraised fair market value of the warehouse was $82,500, and the appraised value of the land was $133,500. 1) What is Bob's
- Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and a land for $130,000. The appraised fair market value of the warehouse was $119,250, and the appraised value of the land was $123,750. What is Bob's basis
- Rod paid $1,000,000 for land and a new warehouse on April 14, 2012: the land was worth $50,000. He sold the land and warehouse on September 29, 2017. 1. What is the life of the as
- On November 15, Johnson Repair Service extended an offer of $35,000 for land that had been priced for sale at $43,000. On December 8, Johnson Repair Service accepted the seller's counteroffer of $37,000. On December 30, the land was assessed at a value of
- Jody purchased a painting for $1,000. Five years later she needed cash so she sold the painting for $1,000, its fair market value at the time of sale. Does Jody have a gross income?
- Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $90,000. The appraised value of the land is $20,000 and the appraised value of the buildin
- Dorsey Co. has expanded its operations, by purchasing a parcel of land with a building on it, from Bibb Co., for $90,000. The appraised value of the land is $24,000, and the appraised value of the bui
- Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb�?? Co. for 90,000. The appraised value of the land is $22,000, and the appraised value of the buil
- Dorsey Co. has extended its operations by purchasing a parcel of land with a building on it from Bibb Co. for $99,000. The appraised value of the land is $23,000, and the appraised value of the building is $107,000. Assuming that the building is to be us
- On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for
- Troy sold land valued at $210,000. His original basis in the land was $180,000. For the land Troy received $60,000 in cash in the current year and a note providing $150,000 in the subsequent year. Wha
- Carle sells land to Brandon for $15,000 cash and a piece of equipment with an adjusted basis of $15,000 ad a fair market value of $20,000. The land was subject to a $25,000 mortgage which Brandon incurred $2,500 in selling expenses. A. What is the amount
- Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $81,000. The appraised value of the land is $30,000, and the appraised value of the building is $97,000. Assuming that the building is to be used
- Miriam gifted property to her brother Aaron on January 25, 2016, at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold th
- On March 31, Higgins Repair Service extended an offer of $415,000 for land that had been priced for sale at $460,000. On April 15, Higgins Repair Service accepted the seller's counteroffer of $437,500. On September 9, the land was assessed at a value of $
- On October 1, Shelly exchanged an apartment building (adjusted basis of $775,000, fair market value of $850,000) for another apartment building owned by Brian (fair market value of $575,000 and subject to an assumable mortgage of 225,000) and $50,000 cash
- Big Bob's Discount Appliances expects sales of $5,000, $5,000, and $10,000 during April, May, and June (big sale in June). To build the business, Big Bob lets all customers buy on credit, and all do so. In the past, 50% of Big Bob's sales have been collec
- Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold the
- Andy runs a real estate development firm. Five years ago, he purchased a piece of land for $250,000. This year, an appraiser tells Andy that the land is worth $300,000. At what value should Andy report the land on his balance sheet? Why?
- Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $90,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on
- Mike, a real estate broker in California, recently inherited a farm from his deceased uncle and plans to sell the farm to the first available buyer. His uncle purchased the property 12 years ago for $600,000. The FMV of the farm on the date of the uncle's
- Walter sells land with an adjusted basis of $175,000 and a fair market value of $160,000 to his mother, Shirley, for $160,000. Walter reinvests the proceeds in the stock market. Shirley holds the land for one year and a day and sells it in the marketplace
- Miriam gifted property to her brother Aaron on January 25, 2016, at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold the property on June 20, 2016, for $90,000. What amount s
- Miriam gifted property to her brother Aaron on January 25, 2016, at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. Assume that Aaron sold the property on June 20, 2016, for $90,000. What amount
- Betty owns land with an adjusted basis of $305,000 subject to a mortgage of $195,000. On April 1, 2007, Betty sells her land and the buyer assumes the mortgage. Betty receives $325,000 in cash and property with an FMV of $60,000. What is the amount realiz
- On November 23, Terrier Repair Service extended an offer of $40,000 for land that had been priced for sale at $48,500. On December 2, Terrier Repair Service accepted the seller's counteroffer of $44,000. On December 27, the land was assessed at a value of
- On May 19, Obermayer Repair Service extended an offer of $77,000 for land that had been priced for sale at $88,000. On June 4, Obermayer Repair Service accepted the seller's counteroffer of $84,000. On October 10, the land was assessed at a value of $126,
- Horton Stores exchanged land and cash of $4,300 for similar land. The book value and the fair value of the land were $89,100 and $101,200, respectively. Assuming that the exchange has commercial substance, Horton would record land-new and a gain/(loss) of
- Horton Stores exchanged land and cash of $4,400 for similar land. The book value and the fair value of the land were $90,000 and $100,400, respectively. Assuming that the exchange has commercial substance, Horton would record land-new and a gain/(loss) of
- Gail Gumm purchased a piece of land, a building, and two trucks for a lump sum of $630,000. On the date of purchase, the land had a fair market value of $125,000, the fair market value of the building was $500,000, one truck is valued at $25,000 and the o
- On Monday, 123 Perfect Lane, comes on the market for sale and 3 interested buyers and their realtors are waiting for the door to open. Amy and Bob love the house and both want to buy it. Amy actually knows the owner of the house and immediately calls her
- Bob, Sam and Tom formed IU Inc. in 2014. Bob contributed equipment (Code Sec. 1231 property) he acquired in 2011 for $190,000. On the date of transfer, the equipment's adjusted basis and fair market value were $100,000 and $150,000, respectively. Bob rec
- Mrs. O is negotiating to purchase a tract of land from DC Company, which is a calendar year taxpayer. DC bought this land six years ago for $480,000. According to a recent appraisal, the land is worth
- Bob and Alice Marshall were divorced on March 1, 2015. The following transactions are the terms of the decree: (a) Alice will transfer title of the family to Bob. The house has a fair market value of
- 1. Sold $400 of merchandise to Bass-A-Rama Rentals and $114 of merchandise to Carl Jenkins. Both customers paid cash. 2. Sold $1700 of merchandise to Waterfront Marina on account; terms 3/10, n/30; in
- On May 19, Integrity Repair Service extended an offer of $335,000 for land that had been priced for sale at $363,000. On June 4, Integrity Repair Service accepted the seller's counteroffer of $345,000. On October 10, the land was assessed at a value of $2
- Jefferson Jerome is interested in purchasing "Art Specialists Inc.", an auction house. The company receives the right to sell art but not to purchase the art themselves for a 5 percent commission. Art Specialists rents office space and Chelsea and holds i
- Hank's home is burglarized on December 22, 2016. Personal property with a fair market value of $40,000 and an adjusted basis to Hank of $25,000 is stolen. Hank paid an independent appraiser $700 on December 29 to determine the fair market value of the pro
- On September 18, 2012 Gerald received land and a building from Frank as a gift. Frank�s adjusted basis and the fair market value at the date of the gift are as follows: Asset Adjusted Basis FMV Land $
- Maplewood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: |Lot Appraised |Value |1 |$72,000 |2|384,000 |3| 24,000 Maplewood paid $265,000 in cash. Record the purchase in the j
- Reiley Co. purchased land as a factory site for $1,000,000. Reiley paid $40,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance costs $2,4
- Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had acquired the property in 1988 and had an adjusted basis in the property
- Jefferson Jerome is interested in purchasing "Art Specialists Inc.", an auction house. The company receives the right to sell art but not to purchase the art themselves for a 5% commission. Art Specialists rents office space and Chelsea and holds its auct
- Concord Co. purchased for $2,152,000 property that included both land and a building to be used in operations. The seller's book value was $310,000 for the land and $943,000 for the building. By appraisal, the fair value was estimated to be $638,716 for t
- Prophet Company signed a long-term purchase contract to buy timber from the U.S. Forest Service at $300 per thousand board feet. Under these terms, Prophet must cut and pay $6,000,000 for this timber during the next year. Currently the market value is $25
- Lump-Sum Purchase To add to his growing chain of grocery stores, on January 1, 2017, Danny Marks bought a grocery store of a small competitor for $622,000. An appraiser, hired to assess the acquired a
- In 1987 R.H. Love Gallery owned the title to a painting entitled Marlton's Cove. The gallery sold 50 percent of the painting to Altman Fine Arts, a New York art dealer, and 50 percent to Andre Lopoukh
- Maud exchanges a beach house that she rents to tourists for a warehouse that she will use in her business. The beach house has an adjusted basis of $210,000 and a fair market value of $220,000. The warehouse has a fair market value of $190,000. Maud also
- A parcel of land is offered for sale at $151,000, is assessed for tax purposes at $113,000, is recognized by its purchasers as being worth $141,000, and is purchased for $138,000. The land should be recorded in the purchaser's books at: a. $144,000 b. $1
- A parcel of land is: offered for sale at $150,00, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser's books at: a) $95,000 b) $140,000 c) $13
- Allen owns land with an adjusted basis of $610,000, subject to a mortgage of $350,000. On April 1, Allen sold his land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000. What is the amoun
- Three years ago, Barbara donates a painting that cost $7,000, to a university for display in the president's office. The fair market value of the painting on the date of the gift is $14,000. If Barbara had sold the painting, the difference between the sal
- Jefferson Jerome is interested in purchasing "Art Specialists Inc.", an auction house. The company receives the right to sell art but not to purchase the art themselves for a 5% commission. Art Specia
- From her Aunt Sona, Clara received property with an FMV at the date of the gift of $51,400. Aunt Sona purchased the property five years ago for $44,300. Clara sold the property for $53,500. Assume Aunt Sona does not have MAGI of over $200,000. a. What is
- 1) Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for
- 1. Bob owned a duplex used as a rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange fo
- Leland Co. paid $1,500,000 for a purchase that included land, building, and office furniture. An appraiser provided the following estimates of the market values of the assets if they had been purchase
- Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $90,000 cash and a painting with a fair market value of $20,000 from th
- Robert acquired his rental property in November 2005 for $100,000 and sold it in October 2015 for $225,000. The accumulated straight-line depreciation on the property at the time of the sale was $20,000. Robert is in the 35 percent tax bracket for ordinar
- Lump-Sum Purchase : To add to his growing chain of grocery stores, on January 1, 2016, Danny Marks bought a grocery store of a small competitor for $520,000. An appraiser, hired to assess the acquired
- Webb Co. acquired 100% of Rand Inc. on January 5, 2018. During 2018, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for
- Webb Co. acquired 100% of Rand Inc. on January 5, 20011. During 2011, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 fo
- Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $35,000. Miriam had an adjusted basis in the property of $40,000. What amount of gain/(los
- On July 1, 2015, Jennifer sold an antique for $12,000 that she had bought for her personal use in 2010 at a cost of $15,000. In her 2015 tax return, Jennifer should treat the sale of the antique as a transaction resulting in: a. A nondeductible loss. b. O
- Dan and Jan, a married couple who live in a community property state, purchased undeveloped land in 1995 paying $140,000 for the land. Their basis remained at $140,000, and on December 2, 2017, Jan died when the property had a FMV of $160,000. Dan's basis
- Horton Stores exchanged land and cash of $5,900 for similar land. The book value and the fair value of the land were $88,500 and $101,500, respectively. Assuming that the exchange lacks commercial sub
- Sarah received a gift of farmland from her father. The land was worth $4 million at the date of the gift, had been farmed by her father for 40 years, and had a tax basis for her father of $30,000. Sarah never farmed the land and sold it eight months after
- Chapter 14: 38. LO.2 During the year, Eugene had the four property transactions summarized below. Eugene is a collector of antique glassware and occasionally sells a piece to get funds to buy another.
- On February 7, McCade Repair Service extended an offer of $63,000 for land that had been priced for sale at $72,000. On February 21, McCade Repair Service accepted the seller's counteroffer of $69,000. On April 30, the land was assessed at a value of $104
- Harry's Haberdashery is a retail clothing store for men. The store operates out of a rented building in Albertsville, Virginia. Shown below is the store's adjusted year-end trial balance dated Decembe
- Mary exchanged an office building used in her business for some land. Mary originally purchased the building for $45,000 and it had an adjusted basis of $20,000 at the time of the exchange. The land had a fair market value of $40,000. Mary also gave $4,00
- A woman cleans out her attic and takes her 33-year old clothes to the local Goodwill store. Goodwill workers sort the clothes and determine they cannot be used or sold. Goodwill should record: a. a loss equal to amount of the dumping fee b. a $50 unrestr
- On February 7, AAA Repair Service extended an offer of $50,000 for land that had been priced for sale at $65,000. On February 21, AAA Repair Service accepted the seller's counteroffer of $57,500. On April 30, the land was assessed at a value of $40,000 fo
- Cornelius opened his Yukon Gold Jewelry Store last year. To get his business started, Cornelius purchased a small building, which was valued at $170,000 when he bought it. He took out a $130,000 loan
- Under MACRS, if the mid-quarter convention is applicable, all property sold is treated as being sold at the mid-point of the quarter in which it is placed in service. For personal property placed in service in 2016, the 179 maximum deduction is limited to
- What is the gain or loss on the sale of Tara?s home? Tara bought the house for $200,000 and the FMV is $160,000 today. Approximately 20% of the property?s value is allocated to land. Tara has claim
- Deadwood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Lot Appraised Value 1 $70,500 2 235,000 3 164,500 Deadwood paid $210,000 in cash. Record the purchase in the journal, ident
- Matt acquired a rental property on 15 April 2013 for $170,000 on 30 April 2019 he sold the property for $325,000. Legal fees on purchase were $1,000 and the legal fees on sale were $1,750.Matt incurred $25,000 for the building of an extension to the prope
- Agnes, a calendar year taxpayer, lists her principal residence with a realtor on April 3, 2010, enters into a contract to sell on May 28, 2010, and sells (i.e., the closing date) the residence on June 30, 2010. The realized gain on the sale is $212,000. W
- Nordso Ltd. purchased a new warehouse. The warehouse had been listed for sale for $5,202,000, but Nordso was able to acquire it for $5,059,000. The bank, which was providing Nordso with the financing for the purchase, required that an appraisal be complet
- Dec 3. Received a check from Swanson Brothers Construction in full payment of invoice dated November 26. The invoice amount was $24,050 3. Sold sewer and drainage pipe to Beverly's Building Products o
- Miriam gifted property to her brother Aaron on January 25, 2016 at which time it had a fair market value of $90,000. Miriam acquired the property in 1966 and had an adjusted basis in the property of $
- Jim Junction purchased a truck for business on November 17, 2009, for $40,000. On July 21, 2010, he exchanged the truck for another truck in a like-kind exchange. The new truck had a fair market value of $42,000. When does the holding period on the new tr
Explore our homework questions and answers library
Browse
by subject