1) A company sells equipment for $150,000 for three equal installments of $50,000. The company’s…
1) A company sells equipment for $150,000 for three equal installments of $50,000. The company’s original basis was $135,000 and accumulated depreciation was $30,000 as of the date of sale. What is the amount and character of the gain the company will recognize in year 1? a. $15,000 of §1231 gain b. $45,000 of §1231 gain c. $5,000 of ordinary income and $30,000 of §1231 gain d. $30,000 of ordinary income and $5,000 of §1231 gain 2) Lexington sells land for $120,000 in exchange for two equal payments of $60,000 per year. Lexington’s original basis was $80,000. How much income will Lexington recognize in the first year upon payment of $60,000? A. $0 B. $13,332 C. $20,000 D. $40,000 E. $60,000 3) Calculate the year 1 depreciation of equipment placed into service on December 15. The cost was $85,000. The asset has a 7 year recovery period. Assume that this is the only property that was placed into service during the year. Hint: You will need to determine the depreciation convention based on the date the company's asset was placed into service. A. $3,035 B. $4,250 C. $17,000 D. $21,250 4) A company purchased office furniture in the 2nd quarter of year 1 for $8,000. The next year, it sells all of its office furniture in the 4th quarter of year 2. What is the company’s depreciation on the office furniture in year 2 assuming the office furniture has a recovery period of 7 years and the company uses the mid-quarter depreciation convention? A. $535 B. $1,250 C. $1,643 D. $1,878 May 16 2022 03:09 PM
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