Gain or income recognizing the exchanges

Assignment Help Accounting Basics
Reference no: EM13122646

Sara and Jane form Wren Corporation. Sara transfers property, basis of $25,000 and value of $200,000, for 50 shares in Wren corporation. Jane transfers property, basis of $10,000 and value of $185,000, and agrees to serve as manager of Wren for one year; in return, Jane receives 50 shares in Wren. The value of Jane's services to Wren is $15,000 .

a) What gain or income do Sara and Jane recognize on the exchanges?

b) What is Wren corporation's basis in the property transferred by Sara and Jane? How does wren treat the value of the services Jane renders?

Reference no: EM13122646

Questions Cloud

Consolidated financial statements of a us parent : Are you familiar with any foreign income tax planning strategies that are utilized by some multinational corporations? Do you know of any of the intricacies of how foreign income taxes impact the consolidated financial statements of a US parent?
Determine the impedances of elements in laplace domain : Redraw the schematics with the impedance of each of the element shown in Laplace domain. Then determine the overall impedance of the entire circuit between the two ends of the shown circuit and express it in Laplace domain as a ratio of two polyno..
Plot graph of equations : Plot the graph of the equations 4x - 6y = 12 and x - 5y = 10 and interpret the result. Plot the graph of the equations 8x - 4y = 12 and -4x + 2y = -6 and interpret the result.
Compute the break-even point in dollars and in units : In August, Gold Company sold 770 units of their only product. For the month, fixed costs were $10,400, variable costs were 57% of sales, and the average sales price was $62.
Gain or income recognizing the exchanges : What gain or income do Sara and Jane recognize on the exchanges? What is Wren corporation's basis in the property transferred by Sara and Jane? How does wren treat the value of the services Jane renders?
Equation of the trend line : Write the equation of the trend line. Do the scores support an increasing or a decreasing trend?
Calculate the standard deviation data : Calculate the Standard Deviation of your data, Your ability to describe a normal distribution as evidenced by a bell shaped curve. Your ability to describe the information provided by the Standard Deviation.
Plot graphs of following functions : Refer to the graph given below and identify the graph that represents the corresponding function. Justify your answer.
Is the related lease finance or operating lease : Identify some benefits that might accrue to Lion Nathan as a result of the sale and lease back transaction?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Prepare the journal entries necessary in the fund-based

Prepare the journal entries necessary in the fund-based and government-wide journals to record each of the following transactions

  Important multiple choice question based on account

A business pays weekly salaries of $15,000 on Friday for a 5-day week ending on day. The adjusting entry require at the end of fiscal period ending on Thursday is;

  Accounting rate of return

What is the internal rate of return? What is the accounting rate of return based on the initial investment? What is the payback period?

  Journals and ledger processing transactions

How are journals and ledger used in processing transactions? If a manufacturing company were to maintain special journals for purchases, sales, cash receipts, and cash disbursements, describe five journal entries that an AIS might make directly to..

  Emerging trends in accounting

Assume that actual cash inflows turn out to be $91,000 per year. Determine the amount of Mr. Holt's bonus if the original computation of net present value were based on $90,000 versus $70,000.

  Question about philosophy of life

Why are we here? What is my purpose to be here? Am I supposed to be doing something great with my life? For thousands of years, men and women have pondered these and similar questions.

  Warrant value of charles river company

Charles River Company has just sold a bond issue with 10 warrants attached. The bonds have a 20-year maturity, an annual coupon rate of 12.0 percent, and they sold at their $1,000 par value.

  Record the sale of the subscriptions

Ramsey Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

  Computing pv of single cash flow

The present value of $100,000 to be received in five years at an interest rate of 16% compounded annually, is $47,610. Calculate the present value of $100,000 for each of the following:

  What are the nominal and effective costs

Grunewald Industries sells on terms of 2/10, net 40. Gross sales last year were $4,562,500 and accounts receivable averaged $437,500. Half of Grunewald's customers paid on the 10th day and took discounts.

  Computing taxable income for year

Assume the same facts except that loon's long-term capital gain is $100,000 (instead of $60,000. Compute Loon's taxable income for the year.

  Basic function of an accounting system

The left-hand side of an account is used in recording debits, and the right hand side is used for recording credits in, Which of the following is NOT a basic function of an accounting system:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd