a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition. b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $782,500 for the land and building together. At the time of acquisition, the land had a fair value of $87,000 and the building had a fair value of $783,000. c. Land B was acquired on October 2, 2022, in exchange for 2,700 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $22 per share. During October 2022, Thompson paid $10,100 to demolish an existing building on this land so it could construct a new building. d. Construction of Building B on the newly acquired land began on October 1, 2023. By September 30, 2024, Thompson had paid $180,000 of the estimated total construction costs of $270,000. Estimated completion and occupancy are July 2025. e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $14,800 and the residual value at $1,700. f. Equipment A's total cost of $117,800 includes installation charges of $520 and normal repairs and maintenance of $11,000. Residual value is estimated at $9,000. Equipment A was sold on February 1, 2024. g. On October 1, 2023, Equipment B was acquired with a down payment of $3,700 and the remaining payments to be made in 10 annual installments of $3,700 each beginning October 1, 2024. The prevailing interest rate was 9%. Required: Supply the correct amount for each answer box on the schedule. Note: Round your intermediate calculations and final answers to the nearest whole dollar. Assets Land A Building A Land B Building B Donated Equipment Equipment A Equipment B THOMPSON CORPORATION Fixed Asset and Depreciation Schedule For Fiscal Years Ended September 30, 2023, and September 30, 2024 Acquisition Date 10/1/2022 10/1/2022 10/2/2019 Under construction 10/2/2022 10/2/2022 10/1/2023 Cost 180,000 to date Residual N/A $ 46,650 N/A 1,700 9,000 Depreciation Method not applicable Straight-line not applicable Straight-line 200% Declining balance Straight-line Straight-line Estimated Life in Years N/A N/A 30 10 10 15 $ Depreciation for Year Ended 9/30 2023 N/A 13,700 N/A 2024 N/A N/A

a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition. b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $782,500 for the land and building together. At the time of acquisition, the land had a fair value of $87,000 and the building had a fair value of $783,000. c. Land B was acquired on October 2, 2022, in exchange for 2,700 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $22 per share. During October 2022, Thompson paid $10,100 to demolish an existing building on this land so it could construct a new building. d. Construction of Building B on the newly acquired land began on October 1, 2023. By September 30, 2024, Thompson had paid $180,000 of the estimated total construction costs of $270,000. Estimated completion and occupancy are July 2025. e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $14,800 and the residual value at $1,700. f. Equipment A's total cost of $117,800 includes installation charges of $520 and normal repairs and maintenance of $11,000. Residual value is estimated at $9,000. Equipment A was sold on February 1, 2024. g. On October 1, 2023, Equipment B was acquired with a down payment of $3,700 and the remaining payments to be made in 10 annual installments of $3,700 each beginning October 1, 2024. The prevailing interest rate was 9%. Required: Supply the correct amount for each answer box on the schedule. Note: Round your intermediate calculations and final answers to the nearest whole dollar. Assets Land A Building A Land B Building B Donated Equipment Equipment A Equipment B THOMPSON CORPORATION Fixed Asset and Depreciation Schedule For Fiscal Years Ended September 30, 2023, and September 30, 2024 Acquisition Date 10/1/2022 10/1/2022 10/2/2019 Under construction 10/2/2022 10/2/2022 10/1/2023 Cost 180,000 to date Residual N/A $ 46,650 N/A 1,700 9,000 Depreciation Method not applicable Straight-line not applicable Straight-line 200% Declining balance Straight-line Straight-line Estimated Life in Years N/A N/A 30 10 10 15 $ Depreciation for Year Ended 9/30 2023 N/A 13,700 N/A 2024 N/A N/A

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions

Section: Chapter Questions

Problem 38P

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