QUESTION 11

1. Baker Corporation owned a building located in Kansas. Baker used the building for its business operations. Last year a tornado hit the property and completely destroyed it. This year, Baker received an insurance settlement. Baker had originally purchased the building for $350,000 and had claimed a total of $100,000 of depreciation deductions against the property. Baker received $450,000 in insurance proceeds and spent $380,000 rebuilding the building during the current year. What is Bakers deferred gain or (loss) on this transaction?

QUESTION 12

1. Russell Corporation sold a parcel of land valued at $500,000. Its basis in the land was $275,000. For the land, Russell received $150,000 in cash in year 0 and a note providing that Russell will receive $200,000 in year 1 and $150,000 in year 2 from the buyer. What is Russells recognized gain in year 0?