Question 1. The Building and Land at the Old Site - Fully analyze this transaction.
Additional Information
a. Assume that the same apportionment ratio is applied to the selling cost as was the original purchase price.
b. The building was placed in service on June 30, 2000. The sale took place on September 2, 2012.
Calculate the gain/loss on the transaction.
i. How will this gain/loss be treated?
ii. What code section(s) will affect this transaction?
iii. How/where will it be reported?
The land at the old site together with the building thereon was sold for $350,000. The land had originally colt $50,000. The building appeared on the company's books at a cost of $760,000 and a depreciation allowance of $450,000 had been accumulated on it.
| Land sold for |
$350,000 |
| Original Cost for the land |
$50,000 |
| Company's books for the building |
$760,000 |
| Depreciation allowance |
$450,000 |
| Amount realized for the land and building |
|
| Adjusted basis for the land |
$ 50,000.00 |
| Adjusted basis for the building |
$ 760,000.00 |
| Total Adjusted basis for the land and building |
$ 810,000.00 |
| (minus) Accumulated depreciation |
$ 450,000.00 |
|
$ 360,000.00 |
i. How will this loss be treated ? The loss will be considered an ordinary loss
ii. What code section will affect this transaction? 1231
iii. How and when will it be reported
Question 2. Certain equipment was sold for $45,000 cash. This equipment appeared on the books at a cost of $167,000, less accumulated depreciation of $97,000.
The equipment that was sold - Fully analyze this transaction. As we have done multiple times in class, calculate the gain/loss on the transaction.
i. How will this gain/loss be treated?
ii. What code section(s) will affect this transaction?
iii. How/where will it be reported?
| Equipment was sold for |
$ 45,000.00 |
| Equipment appeared on the books |
$ 167,000.00 |
| Accumulated depreciation |
$ 97,000.00 |
Question 3. New bindery equipment was purchased. The invoice cost of this equipment was $200,000. A 2% discount was taken by the Bramos Company, so that only $196,000 was actually paid to the seller. The Bramos Company also paid $800 to a trucker to have this equipment delivered. Installation of this equipment was made by Bramos workmen who worked a total of 40 hours. These men received $15.00 per hour in wages, but their time was ordinarily charged to printing jobs at $40.00 per hour, the difference representing an allowance for overhead ($21.00) and profit ($4.00).
New Bindery Equipment - Calculate the cost that would go on the books for this purchase. You should do some research as to what additional costs are included.
i. What about your workers costs? Are they included and if so at what rate?
ii. Fully analyze this asset as we have done in class. Find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENTIRE life. Do not consider section 179 or bonus depreciation.
Question 4. New Land - Calculate the cost that would go on the books for this purchase. Fully analyze this asset as we have done in class. Find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENTIRE life. Do not consider section 179 or bonus depreciation.
The company purchased land for $200,000 in cash.
Question 5. The Bramos Company paid $40,000 to have an ojid building on the plot of land torn down. In addition, the company paid $20,000 to have permanent drainage facilities installed on the new land.
Payments for Changes Made to the New Land- fully analyze these assets as we have done in class. Find the Primary Source to document class, method and convention. Calculate the depreciation for these assets over their ENTIRE life. Do not consider section 179 or bonus depreciation.
Question 6. A new strip caster with an invoice cost of $45,000 was purchased. The company paid 530,000 cash and received a trade-in allowance of S15,000 on a used strip caster. The used strip caster could have been sold outright for not more than S12,000. It had cost $30,000 new, and accumulated depreciation on it was $12,000. The design and technology of the new strip caster was dissimilar to that of the used strip caster traded in for the new strip caster.
New Strip Caster -Fully analyze this transaction As we have done multiple times in class, calculate the gain/loss on the transaction.
i. How will this gain/loss be treated?
ii. What code section(s) Rill affect this transaction?
iii. How where will it be reported?
Calculate the cost that would go on the books for this purchase. Fully analyze these assets as we have done in class. Find the Primary Source to document class, method and convention. Calculate the depreciation for these assets over their ENTIRE life. Do not consider section 179 or bonus depreciation.
Question 7. The company erected a building at the new site for $900,000. Of this amount, $700,000 was borrowed on a mortgage.
The New Building- Calculate the cost that would go on the books for this purchase. Fully analyze this asset as we have done in class. Find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENTIRE life. Do not consider section 179 or bonus depreciation.
Additional Information
a.) The building was placed in service on June 30, 2013.
Question 8. After the equipment had been moved to the new plant, but before operations began there, extensive repairs and replacement of parts were made on a large paper cutter. The cost of this work was $11,000. Prior to this time, no more than $1,000 had been spent in any one year on the maintenance of this paper cutter.
Large Paper Cutter - Fully analyze these costs. How will they be treated? Will they be expensed or capitalized? Find the primary source that answers these questions. If they must be capitalized, find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENTIRE life. Do not consider section 179 or bonus depreciation.
Question 9. Trucking and other costs associated with moving equipment to the new location and installing it there were $14,000.
Moving Costs - Fully analyze these costs. How will they be treated? Will they be expensed or capitalized? Find the primary source that answers these questions. If they must be capitalized, find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENITRE life. Do not consider section 179 or bonus depreciation.
Question 10. During the moving operation, a piece of equipment costing $30,000 was dropped and damaged. $4,000 was spent to repair it. Mr. Timken believed, however, that the salvage value of this equipment was reduced to $2,000. Up until that time, the equipment was being depreciated at $2,400 per year, representing a 10% rate after deduction of estimated salvage of $6,000. Accumulated depreciation was $9,600.
Damaged Equipmert -Fully analyze these costs. How will they be treated? Will they be expensed or capitalized? Find the primary source that answers these questions. If they must be capitalized, find the Primary Source to document class, method and convention. Calculate the depreciation for this asset over its ENTIRE life. Do not consider section 179 or bonus depreciation.
Attachment:- Case.rar