Assume the company sold its net assets on January 1, 2019 for $10,000,000. FMV of equipment was $2.2 million. Financial value reported for remaining assets and liabilities = their FMVs. Calculate the gain or loss on each asset sold and the shareholder gain due to the liquidation. Tax Rate = 21%. Shareholders basis in stock = $100,000.

Keurig, Inc. Balance Sheets December 31 2018 2017 Assets Current assets: Cash and cash equivalents $ 3,863,962 $ 2,856,939 Accounts receivable, net of allowances of $207,888 5,397,455 4,437,314

in 2018 and $113,000 and 2017 Inventories (FIFO) 2,240,703 1,584,909 Prepaid expenses and other assets 585,993 345,111 Total current assets 12,088,113 9,224,273 Equipment, net of accumulated depreciation and 2,605,816 5,225,592 amortization Restricted cash 84,874 84,441 Other assets, principally equipment deposits 283,616 330,464 ______________ _____________ $ 15,062,419 $ 14,864,770

Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 6,328,632 $ 4,292,940 Current portion of capital lease obligations - 39,269 Total current liabilities 6,328,632 4,332,209

Equipment Equipment is stated at cost and consists of the following at December 31: 2018 2017 Production equipment $5,045,906 $5,978,383 Office equipment 195,406 171,502

Packaging equipment in progress 365,052 1,982,850 5,606,364 8,132,735 Less accumulated depreciation and amortization (3,000,548) (2,907,143) $2,605,816 $5,225,592 Depreciation and amortization of equipment is principally calculated using the straight-line method over three to seven years, which is the estimated useful life of the related equipment.

Depreciation expense amounted to $1,409,528, $1,019,742 and $1,061,205 in 2018, 2017 and 2016, respectively. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: 2018 2017 Accounts payable $3,092,527 $2,262,083 Accrued compensation 1,606,606 1,339,642 Accrued warranty costs 242,371 162,325

Deferred royalties and deposits 952,532 348,273 Other 434,596 180,617 $6,328,632 $4,292,940

8. Income Taxes Deferred tax assets and liabilities are determined based on the differences

between financial and tax reporting. Deferred taxes are attributable to the following temporary differences: December 31 2018 2017 Deferred tax liability: Equipment $ (193,800) $ (169,244) Deferred tax assets: Allowance for doubtful accounts 43,656 23,730 Accrued expenses and allowances 63,600 83,700

Reference (SMU,2021)

Jurisdiction - Texas