Pete sells equipment for $15,000 to Marcel, his son. The equipment cost $20,000 and has accumulated depreciation of $12,000. Marcel will use the equipment in his business.
a. What is the amount and character of Pete's gain on the sale?
b. How does your answer change if the sales price is $22,000?
a.
The gain is less than the $12,000 depreciation taken, so it will consist entirely of ordinary income under Sec. 1245.
b.
The gain is ordinary income according to Sec. 1239 since it involves a sale between related parties.
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The entry to record patent amortization of $4,500 embedded in a product is as follows:
a. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 b. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 c. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Allowance for Amortization of Patent . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 d. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Allowance for Amortization of Patent . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 e. none of the above
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As implied in chapter 5 of your textbook, why should we be wary of the promotion of organizational cultures as ‘families’?
a. You can choose the organization you work for, you cannot choose your family – calling an organization a family assumes a bond which makes it harder for you to leave b. Designer culture uses an idealized notion of organizations as families, where the family is always like the Brady Bunch -typified by love, fun and support are promoted c. Designer cultures ignores the existence of families like Charles Manson’s – typified by psychological and physical abusive, violence, brainwashing and even murder d. All of the above