Fran, George, and Helen form FGH Corporation. In exchange for 300 shares of stock of the corporation, Fran contributes property with a basis of $15,000, fair market value of $50,000 and subject to a liability of $20,000 which the corporation assumed. George contributes property with a basis of $20,000, fair market value of $30,000 in exchange for 250 shares of stock of the corporation with a
value of $25,000 plus $5,000 cash. Helen performs services for the corporation and receives $2,000 worth of stock (20 shares) in exchange for the services.
a. What is the amount of Fran's recognized gain or loss on the transaction?
b. What is Fran's basis in the stock of the corporation?
c. What is the corporation's basis in the property received from Fran?
d. What is the amount of George's recognized gain or loss on the transaction?
e. What is George's basis in the stock of the corporation?
a. $5,000 gain = $20,000 - $15,000
b. $0 = $15,000 + $5,000 - $20,000
c. $20,000 = $15,000 + $5,000
d. $5,000, boot received
e. $20,000 = $20,000 - $5,000 + $5,000
You might also like to view...
When Lisa makes decisions, she prefers to have concrete and tangible information, like data. Lisa most likely has a high degree of ______.
A. feeling B. judging C. sensing D. perceiving
Responsibility accounting would most likely hold a manager of a manufacturing unit responsible for:
a. cost of raw materials. b. quantity of raw materials used. c. the number of units ordered. d. amount of taxes incurred.
The weighted average cost of capital represents the
a. cost of bonds, preferred stock, and common stock divided by the three sources. b. equivalent units of capital used by the organization. c. overall cost of capital from all organization financing sources. d. overall cost of dividends plus interest paid by the organization.
Why is it necessary to journalize transactions from the bank reconciliation? List two examples of items that need to be journalized
What will be an ideal response