Rivendell Corporation uses the accrual method of accounting and has the following assets as of the end of 2014. Rivendell converted to an S corporation on January 1, 2015.

a) What is Rivendell's net unrealized built-in gain at the time it converted to an S corporation?
b) Assuming the land was valued at $200,000, what would be Rivendell's net unrealized gain at the time it converted to an S corporation?
c) Assuming the original land value but that the inventory was valued at $85,000, what would be Rivendell's net unrealized gain at the time it converted to an S corporation?

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Adjusted Basis Asset FMV $ 40,000 30,000 130,000 Cash Accounts receivable Inventory Land Totals $ 40,000 30,000 60,000 125,000 100,000 $300,000 $255,000