Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Emma, a sole proprietor, was engaged in a service business and reported her income on a cash basis. Later, she incorporates her business and transfers
Emma, a sole proprietor, was engaged in a service business and reported her income on a cash basis. Later, she incorporates her business and transfers the assets of the business to the corporation in return for all the stock in the corporation plus the corporation's assumption of the liabilities of her proprietorship. All the receivables and the unpaid trade payables are transferred to the newly formed corporation. |
The assets of the proprietorship had a basis of $109,300 and fair market value of $270,000. The trade accounts payable totaled $18,000. There was a note payable to the bank in the amount of $93,500 that the corporation assumes. The note was issued for the purchase of computers and other business equipment. |
Which of the following statement is true?
| ||||
|
| |||
| None of these. | |||
|
| |||
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started