Blue Corp. purchased 100% of the stock of Magenta Corp. in 1984 for $300,000. Early this year, Magenta was liquidated. Blue Corp. received all of Magenta’s assets, which had a basis to Magenta Corp. of $420,000 and a FMV of $440,000. Assume the requirements of §332 were satisfied. What about of gain will Blue Corp. recognize any gain as a result of the liquidation?
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- Pursuant to a complete liquidation, Carl Corporation distributes to its shareholders real estate held as an investment (basis of $650,000, fair market value of $775,000). a. Compute the gain or loss recognized by Carl Corporation on the distribution if no liability is involved. b. Compute the gain or loss recognized by Carl Corporation on the distribution if the real estate is subject to a liability of $700,000. c. Compute the gain or loss recognized by Carl Corporation on the distribution if the real estate is subject to a liability of $895,000.Goose Corporation has a basis of $7,645,000 in the stock of Swift Corporation, a wholly owned subsidiary acquired 30 years ago. Goose liquidates Swift Corporation and receives assets that are worth $6,116,000 and have a basis to Swift of $ 5,351,500. If an amount is zero or there is no gain or loss, enter "0". a. Determine Goose Corporation's recognized gain or loss on the liquidation. Goose recognizes of: . As a result, Goose's basis in the Swift stock is now s b. Determine Goose Corporation's basis in the assets received in liquidation. Goose Corporation has a basis of $ in the assets received in liquidation.2.On Feb, 1, Johnson Co. agreed to sell the assets of its Formal Wear Division to Sun Hat Inc. The following additional facts pertain to the transaction: The Formal Wear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Formal Wear's assets totaled $48 million on December 31, 2021. Formal Wear's operating income was a pre-tax loss of $10 million in 2021. Tango's income tax rate is 25%. Suppose that the Formal Wear Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets was $40 million at December 31, 2021. In the income statement for the year ended December 31, 2021, Tango Co. would report discontinued operations of: A) $7.5 million loss. B) $10.0 million loss. C) $18 million loss. D) $13.5 million loss. .
- Under its plan of liquidation, Better Corp will distribute all of its assets to its sole shareholder, Barry. The assets have a FMV of $50,000 and an adjusted basis of $14,000. Barry's basis in Corp stock is $6,500. What is the gain that Better Corp will realize upon liquidation? What is the gain that Barry will realize upon liquidation?Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real estate held as an investment (basis of $1,066,000, fair market value of $1,385,800). a. Determine the gain or loss recognized by Carrot on the distribution if no liability is involved. If no liability is involved, Carrot has a recognized of $ on the distribution. b. Determine the gain or loss recognized by Carrot on the distribution if the real estate is subject to a liability of $1,172,600. If the real estate is subject to a liability of $1,172,600, Carrot has a recognized of $ C. Determine the gain or loss recognized by Carrot on the distribution if the real estate is subject to a liability of $1,492,400. If the liability were $1,492,400, Carrot's recognized on the distribution would beGoose Corporation has a basis of $2,400,000 in the stock of Swift Corporation, a wholly owned subsidiary acquired 30 years ago. Goose liquidates Swift Corporation and receives assets that are worth $2,000,000 and have a basis to Swift of $1,700,000. a. Determine Goose Corporation’s recognized gain or loss on the liquidation. b. Determine Goose Corporation’s basis in the assets received in liquidation.
- Sunshine NFP, a not-for-profit entity, gains control over Dancing Bears NFP, another not-for-profit. The acquisition value of Dancing Bears is $2.3 million, but all of its identifiable assets and liabilities have a total fair value of only $2.1 million. What recording is made of the $200,000 difference?On January 1, 2011, Jordan Inc. acquired 30% of Nico Corp. Jordan used the equity method to account for the investment. On January 1, 2012, Jordan sold two-thirds of its investment in Nico. It no longer had the ability to exercise significant influence over the operations of Nico. How should Jordan have accounted for this change? Multiple Choice Jordan should restate the prior years' financial statements and change the balance in the investment account as if the fair-value method had been used since 2011. Jordan should report the effect of the change from the equity to the fair-value method as a retrospective change in accounting principle. Jordan should continue to use the equity method to maintain consistency in its financial statements. Jordan has the option of using either the equity method or the fair-value method for 2011 and future years. Jordan should use the fair-value method for 2012 and future years but should not make a retrospective adjustment to the investment account.Ping Company acquires all of Sun Corp. in an asset acquisition. Ping paid P1,000,000 more than Sun’s book value, and this excess was attributed entirely to goodwill, as all of Sun’s assets and liabilities were carried at amounts equivalent to fair value. At the time of the combination, a lawsuit was pending against Sun, which Sun had not recorded on its books. It was felt at the time that Sun would win the lawsuit, so no provision for it was made when Ping recorded the asset acquisition Assuming that the value change as a result of event subsequent (more than 1 yr) to the acquisition. The appropriate entry on Ping's books to record the new information. Debit, Retained Earnings, P400,000; Credit, Estimated lawsuit liability, P400,000 Debit, Loss on lawsuit, P400,000; Credit, Estimated lawsuit liability, P400,000 Debit, Goodwill, P400,000; Credit, Estimated lawsuit liability, P400,000 No entry required
- On November 8, 2023, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $62,000 and was sold to Wood for $74,000. For consolidated financial statement reporting purposes, when must the gain on the sale of the land be recognized? O Proportionately over a designated period of years. O No gain may be recognized. O When Wood Co. sells the land to a third party. O As Wood uses the land.XYZ Corporation has a basis of $1,200,000 in the stock of ABC Corporation, a wholly owned subsidiary acquired several years ago. XYZ liquidates ABC Corporation and receives assets that are worth $1,000,000 and have a basis to ABC of $850,000. Determine XYZ Corporation’s recognized gain or loss on the liquidation. Determine XYZ Corporation’s basis in the assets received in liquidation.Carla Vista is having liquidity issues and must sell its business. The company's total assets have a fair value of $1150000 and its liabilities have a fair value of $164000. If Sunland, Inc. purchases the company for $360000, how much if any, will Sunland record as a gain on acquisition? $3600000 $986000 $626000 $ -0-