Evaluate chis recognized gain or loss on the exchange

Reference no: EM133150

Question :

1. Chi Corporation trades an asset with a book value of $20,000 for other asset with a fair market value of $15,000. The exchange is deemed to lack commercial substance. Chi s asset had a reasonable market value of $14,000. Chi paid $1,000 as boot. Evaluate Chi s recognized gain or loss on the exchange.

Answer

$5,000 loss

$6,000 loss

$1,000 profit

$5,000 realized but no loss is recognized

2. Which of the subsequent statements concerning the exchange of an asset that has commercial substance does not follow usually accepted accounting principles (GAAP)?

Answer

The recognition of any profit should be postponed throughout a lower depreciation basis for the new asset.

The new asset would be recorded based on the reasonable market value of the acquired asset.

The new asset would be recorded based on the reasonable market value of the asset given up.

Losses should forever be recognized because the exchange culminates the earnings process.

3. Adams Market Inc. trades an asset with a book value of $10,000 for other asset with a fair market value of $8,500 and gets $2,000 as boot. The exchange is deemed to lack commercial substance. The fair market value of Adams Market s old asset is $10,500. Evaluate Adams Market s recognized profit or loss.

Answer

$95 gain

$405 gain

$500 gain

$500 loss

King Corporation owns machinery with a book value of $380,000. It is evaluated that the machinery will produce future cash flows of $350,000. The machinery has a fair value of $280,000. King could recognize a loss on impairment of

Answer

$100,000.

$ 70,000.

$ 30,000.

$ -0-.

4. On March 1, 2005, Johnson Company purchased for $1,000,000 a building and the land on which it is located. The subsequent data were available concerning the property: Land: Appraised value - $600,000, Seller s Book Value - $300,000. Building: Appraised value -$600,000, Seller s Book Value -$400,000. Johnson should record the land at

Answer

$300,000.

$428,571.

$500,000.

$600,000

4. Dotel Company's 12/31/15 balance sheet reports assets of $9,000,000 and liabilities of $3,750,000. All of Dotel's assets' book values estimated their fair value, except for land, which has a fair value that is $600,000 bigger than its book value. On 12/31/15, Egbert Corporation paid $9,150,000 to get Dotel. What amount of goodwill could Egbert record as a result of this purchase?

Answer

$ -0-

$3,300,000

$ 150,000

$3,900,000

Reference no: EM133150

Questions Cloud

How many shares of ordinary stock are outstanding : How many shares of ordinary stock are outstanding at year-end?

Exemplify non financial rewards that organisations can offer : Exemplify and evidently give details what do you understand by the term intrinsic reward (ii) Make clear and demonstrate 5 non financial rewards that organisations can offer to their workforce (iii) How far do you have the same opinion with the..

Generate a report showing the company''s activity variances : Generate a report showing the company's activity variances for April.

Financial statements of the subsidiary : financial statements of the subsidiary and the parent are consolidated.

Evaluate chis recognized gain or loss on the exchange : Evaluate Chis recognized gain or loss on the exchange.

Evaluate the annual break-even point : Evaluate the annual break-even point, in number of haircuts.

Determine the cost of goods sold amount : Determine the cost of goods sold amount for the three transactions above? Evaluate the gross profit for the three transactions above?

What is the journal entry required to establish the lifo : What is the journal entry required to establish the LIFO reserve for Orange Corporation?

Evaluate the correct inventory amount : Evaluate the correct inventory amount

User Account

All Pages