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Need help! Ashley had $10,000 in credit card debt. She negotiated a settlement with the credit card company. Ashley paid $3,000 of the credit card
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Ashley had $10,000 in credit card debt. She negotiated a settlement with the credit card company. Ashley paid $3,000 of the credit card debt, and the credit card company agreed to cancel $7,000 of the debt. If Ashley had total assets of $10,000 and total liabilities of $20,000 immediately before the debt was cancelled, what amount of gross income does Ashley have as a result of the credit card company cancelling $7,000 of her debt? What if Ashley had total assets of $20,000 and liabilities of $10,000 ? What if Ashley had total assets of $5,000 and liabilities of $10,000 ? Instead of credit card debt, assume that the $10,000 debt was a note payable to the seller on the purchase of a motorcycle, and the seller agreed to cancel $7,000 of the pote. How much gross income would Ashley recognize? How would this impact Ashley's basis in the motorcycle Step by Step Solution
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