We appreciate your visit to Zeke s Zipline Adventures sold a bus used in the business for 16 000 The original cost of the bus was 15 000 and the. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Zeke will recognize gain in the current year proportionally as he receives payment. Initially, there is no gain recognized since the cash received ($4,000) does not exceed the adjusted basis ($13,600). The total gain will be recognized as he receives the rest of the payments in the following years.
To determine how much gain Zeke will recognize in the current year from the sale of the bus, the recognized gain will be the amount realized from the sale minus the bus's adjusted basis. Since Zeke received $4,000 at the time of sale and expects the rest in the coming years, the initial amount realized is $4,000. However, the total amount will be $16,000 when fully received. The adjusted basis of the bus at the time of the sale was $13,600. To calculate the gain recognized in the current year, you deduct the adjusted basis ($13,600) from the amount he received in the current year ($4,000), resulting in a negative number, which means there's no recognized gain yet. Zeke will recognize the gain in the years he receives the remaining payments.
Regarding the installments, Zeke will need to recognize the gain proportionally as he receives each payment. Since the total gain on the sale is $2,400 ($16,000 - $13,600), he'll allocate this gain to each payment based on the ratio of the payment to the total sales price.
Thanks for taking the time to read Zeke s Zipline Adventures sold a bus used in the business for 16 000 The original cost of the bus was 15 000 and the. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
Zeke will recognize a gain of $600 in the current year from the sale of the bus. This is calculated by taking the proportion of the sale amount received this year ($4,000) and applying it to the total gain ($2,400), which is the difference between the selling price ($16,000) and the adjusted basis ($13,600).
The question concerns the gain recognition on the sale of a business asset, specifically a bus in this scenario. When a business sells an asset, the gain or loss is the difference between the selling price and the asset's adjusted basis. For Zeke's Zipline Adventures, the adjusted basis of the bus is $13,600, and the selling price is $16,000.
To calculate the recognized gain in the current year, we consider the amount received at the time of sale, which is $4,000. As this is an installment sale, Zeke will recognize gain in proportion to the amount received each year. In the current year, Zeke's recognized gain is calculated as follows: Gain = Selling Price - Adjusted Basis; Recognized Gain = (Amount Received / Total Selling Price) * Total Gain.
Hence, the recognized gain is ($4,000 / $16,000) * ($16,000 - $13,600) = 1/4 * $2,400 = $600.
