Knox operated a business which was damaged by a hurricane. His losses were as follows: AssetBasisFMV BeforeFMV AfterInsurance Proceeds1$3,000 $6,000 $0 $5,000 2 45,000 65,000 0 75,000 3 7,200 15,000 0 0 a. What is Knox's net casualty loss (if any) assuming his AGI is $85,000 prior to the deduction? Assume he properly replaced all assets. b. What is his basis in replacement Asset 1 purchased for $8,000 assuming Knox elected the non-recognition of gain from an involuntary conversion?
What will be an ideal response?
a. $7,200 business casualty loss. The involuntary conversion rules do not apply to the loss on asset 3. Also, since this is a business casualty, neither the 10% AGI floor nor the $100 per event floor applies.
b. $6,000 ($8,000 FMV/purchase price ? $2,000 deferred)
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Warrior Dash Express Inc owns a moving van that originally cost $500,000 and currently has $450,000 of accumulated depreciation. The fair value of the moving van is $120,000 . Warrior Dash Express Inc exchanges the van plus $480,000 in cash for a new moving van costing $600,000 . The entry to record the transaction is as follows:
a. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .450,000 Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 Gain on Trade-in of Old Van . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 b. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .450,000 Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 c. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .380,000 Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 d. Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 Gain on Trade-in of Old Van . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 Accumulated Depreciation (old van) . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 e. Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,000 Cash . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000 Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . . . . . . . . 450,000
If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment?
A) The asset's historical cost, replacement cost, and its estimated salvage value B) The estimated salvage value of the asset, its replacement cost, and its market value C) The asset's replacement cost, its estimated life, and its estimated salvage value D) The useful life of the asset, its historical cost, and its estimated salvage value
Certain of the concepts and practices popularized by the human relations movement continue to be present today, especially those that involve human relations and employee motivation
Indicate whether the statement is true or false.
Which of the following statements about the provisions of the building and personal property coverage form is (are) true?
I. A separate deductible must be satisfied for each building damaged in the same occurrence. II. Under the replacement cost option, there is no deduction for depreciation. A) I only B) II only C) both I and II D) neither I nor II