The ABC company bought a truck costing $100,000 two and a half years ago. The trucks estimated life was four years at the time of purchase. It was accounted for by using straight line depreciation with zero salvage value. The truck was sold yesterday for $15,000. what taxable gain must be reported on the sale of the truck?

The ABC company bought a truck costing $100,000 two and a half years ago. The trucks estimated life was four years at the time of purchase. It was accounted for by using straight line depreciation with zero salvage value. The truck was sold yesterday for $15,000. what taxable gain must be reported on the sale of the truck?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Galley purchased a property two years ago at a cost of $19,800, and the firm uses a three-year straight line depreciation method. The firm no longer uses this property so is selling it today at a price of $13,500. What is the amount of the pretax profit on the sale? A. 11140.48 B. 6900 C. 10500 D. 10702.4
Hampton Inc. purchased a machine to use in its business. The machine is estimated to have an economic life of 10 (ten) years before it becomes obsolete. The company expects to use the machine for 4 (four) years before it sells the machine to another company. Hampton uses the straight-line depreciation method. Question: How many years should Hampton depreciate this asset over? (4,7,10, or 14)
Stark Industries., a C corporation, owned an office building for several years. The building was originally purchased for $275,000 and has accumulated depreciation of $45,000 using straight-line depreciation under the modified accelerated cost recovery system. If Stark sold the building for $300,000, what amount is recaptured as ordinary gain from this transaction?
Queen Restaurant purchased huge electric griller equipment amounting to P1,300,000. When the electric griller was permanently retired from use, the accumulated depreciation was P490,000 and has a salvage value of P70,000. How much is the deductible loss from permanent retirement?
Mazaya company has decided to sell one of its old machines on June 30, 2011. The machine was purchased for $120,000 on January 1, 2007, and was depreciated on a straight-line basis for 10 years with no residual value. If the machine was sold for $33,000, what was the amount of the gain or loss recorded at the time of the sale?
Miss Granny purchased a machine amounting to $700,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of $50,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date $510,000 and the cost of disposal is $10,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is $490,000 and the cost of disposal is $5,000. How much is the gain or loss in the reclassification in 2019?
John Morse Corporation buys a van for $16,000. The estimated life of the van is four years. The residual value of the van is $4,000. After two years, the van is sold for $8,000. What was the difference between the book value and the amount received from selling the van if John used the straight-line method of depreciation?
A Hat company bought a new machine for $1,000. This equipment has a useful life of 15 years and a salvage value of $200. The company has been using the seven-year MACRS property class to depreciate the asset for tax purposes. At the end of year 5, the company sold the equipment for $800. The tax rate is 40%. What are the net proceeds (after tax) from the sale of the equipment?
Kwan acquired a warehouse for business purposes on August 30, 2002. The building cost $550,000. Kwan took $291,500 of depreciation on the building, and then sold it for $680,000 on July 1, 2022. Required: What is the adjusted basis for the warehouse? What amount of the gain or loss is realized on the sale of the warehouse? What amount of the gain or loss is unrecaptured? At what rate is the unrecaptured gain or loss taxed? What amount of the gain or loss qualifies as a § 1231 gain or loss?
11. Gingerbread Corp had been depreciating a delivery truck for 3 years when it decided to sell the truck. The historical cost of the delivery truck was $40,000 with an estimated salvage value of $5,000 and a useful life of 7 years. The company had recorded $7,000 of depreciation expense every year for three years. The company sold the truck for $21,000. What is the gain or loss recorded on the sale of the truck. a.Loss of $4,000 b.Gain of $2,000 c.Gain of $4,000 d.Loss of $2,000
Popeye Company purchased a machine for $350,000 on January 1, 2020. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2020. Popeye discovered the error in 2021. What amount should Popeye record as depreciation expense for 2021? The tax rate is 25%. O O O O $105,000. $52,500. $70,000. $140,000.
Popeye Company purchased a machine for $370,000 on January 1, 2023. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2023. Popeye discovered the error in 2024. The tax rate is 25%. What amount should Popeye record as depreciation expense for 2024?

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