Question
On June 30, 2020, Smith Ltd. sold a rental property that it had operated for many years. Smith Ltd. has a December 31 year-end. You
On June 30, 2020, Smith Ltd. sold a rental property that it had operated for many years. Smith Ltd. has a December 31 year-end. You have been given the following background information.
|
| Land | Building (Class3) |
| Original cost | $125,000 | $175,000 |
| UCC, December 31, 2019 |
| 135,000 |
| Proceeds, June 30, 2020 | 270,000 | 230,000 |
USEL received the following consideration in payment for the assets.
| Cash | $200,000 |
| Mortgage | 300,000 |
The principal amount of the mortgage is amortized over 25 years and has a three-year term, starting July 1, 2020.The principal payments of $12,000 are made on January 1 each year, starting on January 1, 2021. At the end of the three-year term, the balance of the mortgage will be paid in full.
Required: Calculate the minimum effect on income in year 2020 & 2021. (Hint: Capital Gain Reserve)
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Audit Function Strategy Driving Audit Value The Best Practice Strategy Guide For Maximising The Audit Added Value At The Internal Audit Function Level Volume 1
Authors: Hans Beumer
1st Edition
3906861139, 978-3906861135
