Determine the effect of all these transactions on net


Chesterfield Corp, a franchise manufacturing industrial pipes, began business on January 1, 2013. In the process of beginning operations, it incurred the following capital expenditures:

Manufacturing equipment $95,000

Furniture and fixtures 34,000

Small tools (under $500) 12,400

Franchise (expires in 8 years) 35,200

Forklift vehicle (used) 22,000

Leasehold improvements (8-year lease) 30,000

The business was immediately successful and generated substantial profits for the years ended December 31, 2013 and 2014.

In 2014, the forklift was traded in for a newer forklift costing $43,000. A value of $15,000 was assigned to the old forklift when it was traded in.

In 2015, due to a downturn in the economy, the owner decided to sell the business. As a result, the assets were valued and sold on December 31, 2015, for the following values:

Manufacturing equipment      $ 55,000

Furniture and fixtures      20,000

Small tools        8,300

Franchise        40,000

Forklift vehicle        34,500

Leasehold improvements      26,000

Goodwill        17,000

Total    $200,800

Required:

Determine the effect of all these transactions on net income for tax purposes for the 2013, 2014, and 2015 taxation years. (Round to nearest dollar)

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Financial Management: Determine the effect of all these transactions on net
Reference No:- TGS02664811

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