A fire destroyed equipment used by Pirates Inc. in its manufacturing business. Pirates' adjusted tax basis...
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A fire destroyed equipment used by Pirates Inc. in its manufacturing business. Pirates' adjusted tax basis in the equipment was $24,000 Three weeks after the fire, Pirates paid $40,000 for a replacement equipment. Which of the following statements is false? O If the destroyed equipment was uninsured, Pirates recognizes a $16,000 capital loss. O If the destroyed equipment was uninsured, Pirates takes a $40,000 basis in the new equipment. If the destroyed equipment was insured and Pirates received a $20,000 insurance reimbursement it recognizes a $4,000 ordinary loss. O If the destroyed equipment was insured and Pirates received a $20,000 insurance reimbursement, it takes a $40,000 basis in the new equipment. Pinecove Company realized a $74,900 gain on the exchange of one asset for another asset (no cash was included in the exchange). The assets were like-kind properties. Pinecove reported the gain as revenue on its financial statements. Which of the following is true? O The exchange resulted in a favorable temporary book/tax difference. O The exchange resulted in a favorable permanent book/tax difference. O The exchange resulted in an unfavorable temporary book/tax difference. O The exchange resulted in an unfavorable permanent book/tax difference. A fire destroyed equipment used by Pirates Inc. in its manufacturing business. Pirates' adjusted tax basis in the equipment was $24,000 Three weeks after the fire, Pirates paid $40,000 for a replacement equipment. Which of the following statements is false? O If the destroyed equipment was uninsured, Pirates recognizes a $16,000 capital loss. O If the destroyed equipment was uninsured, Pirates takes a $40,000 basis in the new equipment. If the destroyed equipment was insured and Pirates received a $20,000 insurance reimbursement it recognizes a $4,000 ordinary loss. O If the destroyed equipment was insured and Pirates received a $20,000 insurance reimbursement, it takes a $40,000 basis in the new equipment. Pinecove Company realized a $74,900 gain on the exchange of one asset for another asset (no cash was included in the exchange). The assets were like-kind properties. Pinecove reported the gain as revenue on its financial statements. Which of the following is true? O The exchange resulted in a favorable temporary book/tax difference. O The exchange resulted in a favorable permanent book/tax difference. O The exchange resulted in an unfavorable temporary book/tax difference. O The exchange resulted in an unfavorable permanent book/tax difference.
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Related Book For
Business Law The Ethical Global and E-Commerce Environment
ISBN: 978-0071317658
15th edition
Authors: Jane Mallor, James Barnes, Thomas Bowers, Arlen Langvardt
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