ZuoTi.Pro
Question

Help! I need help understanding how to arrive at the correct solution to each section of...

Help! I need help understanding how to arrive at the correct solution to each section of this particular problem. I would greatly appreciate it.

Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1 million and related liabilities of $1.25 million. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities.

a. How much gross income does KuhnCo report as a result of the debt cancellation?

b. How would your answer change, if at all, had the lender canceled $200,000 of the debt?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

IN THE FIRST CASE ,

ASSET VALUE= 1000000

LIABILITY= 1250000

LENDER AGREES TO CANCEL 400000 ie , LIABILITY FALLS TO $850000

SO GROSS INCOME IS 1000000-850000= $150000

SECOND CASE

ASSET VALUE =1000000

LIABILITY AFTER CANCELLATION = 1250000-200000=1050000

GROSS INCOME/LOSS = 1000000-1050000= (-50000) ie, LOSS OF $50000

0 0
Add a comment
Know the answer?
Add Answer to:
Help! I need help understanding how to arrive at the correct solution to each section of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair...

    Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1 million and related liabilities of $1.25 million. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities. a. How much gross income does KuhnCo report as a result of the debt cancellation? b. How would your answer change, if at all, had the lender cancelled $200,000 of the debt?

  • Help! I need help understanding how to arrive at the correct solution. I will also need...

    Help! I need help understanding how to arrive at the correct solution. I will also need an explanation to have clarity. I would greatly appreciate it. Lefty completes the following capital asset transactions. By how much does Lefty’s AGI increase as a result of these gains/losses? Long-term gain $10,000 Short-term gain 4,000 Short-term loss 25,000

  • Help! I have trouble understanding how to arrive at the correct answer for the following question:...

    Help! I have trouble understanding how to arrive at the correct answer for the following question: NATLA Inc. purchased several investments in debt securities during 2018, its first year of operations. The following information pertains to these securities. The fluctuations in their fair values are not considered permanent. Held to Maturity Securities: Fair Value 12/31/2017 Fair Value 12/31/2018 Amortized Cost 12/31/2017 Amortized Cost 12/31/2018 ABC Co. Bonds $ 375,000 $ 400,000 $ 367,500 $ 360,000 Trading Securities: Fair Value 12/31/2017...

  • Help. Can you please explain to me the steps as to how to arrive at the...

    Help. Can you please explain to me the steps as to how to arrive at the answer of 10% on ROE? I would appreciate it. Question: Bobcat Industries has a net profit margin of 3%, a total asset turnover of 2 times; and a debt ratio of 40%. What is the firm’s ROE?

  • Hi. I need an help understanding each of the given situations. I would greatly appreciate it....

    Hi. I need an help understanding each of the given situations. I would greatly appreciate it. Which of the following individuals are required to file a tax return for 2019? Should any of these individuals file a return even if filing is not required? Why or why not? a. Patricia, age 19, is a self-employed single individual with gross income of $5,200 from an unincorporated business. Business expenses amounted to $4,900. b. Mike is single and is 67 years old....

  • I need help understanding how to answer this and the proper way to answer this -...

    I need help understanding how to answer this and the proper way to answer this - I attempted it twice the way I thought and came up with the wrong answers. If you solve this in excel, if you can show the formulas used as well as the values it generates, it would be greatly appreciated. Maintenance money for an athletic complex has been sought. Mr. Kendall, Athletic Director, would like to solicit a donation to cover all future expected...

  • Hi. I need help with the following question and need an explanation. I would greatly appreciate...

    Hi. I need help with the following question and need an explanation. I would greatly appreciate it. In 2019, Gray Corporation, a calendar year C corporation, holds a $75,000 charitable contribution carryover from a gift made in 2014. Gray is contemplating a gift of land to a qualified charity in either 2019 or 2020. Gray purchased the land as an investment five years ago for $100,000 (current fair market value is $250,000). Before considering any charitable deduction, Gray projects taxable...

  • I need help in find the solution and understanding the work process behind solve the problems...

    I need help in find the solution and understanding the work process behind solve the problems step by step. I would appreciate the help with these problems 1. What is the treezing point of a solution prepared by dissolving 20 g of NaCI (MW 58.4 g mol) in 150 ml. of water? The freezing point depression constant, K, for water 53.4 2. What is the osmotic pressure formed by dissolving 44 2 mg of aspirin (C,l1,0) in 0.358 L of...

  • Help! I need assistance trying to find the solution with this problem and need detailed explanations...

    Help! I need assistance trying to find the solution with this problem and need detailed explanations so I can better understand it. I would greatly appreciate it. Lori, who is single, purchased 5-year class property for $200,000 and 7-year class property for $420,000 on May 20, 2019. Lori expects the taxable income derived from her business (without regard to the amount expensed under § 179) to be about $550,000. Lori has determined she should elect immediate § 179 expensing in...

  • I have the correct answers written on this questions, but I need help understanding how to...

    I have the correct answers written on this questions, but I need help understanding how to get those answers. Thanks! Chapter 17 .5 4. Calculate the pH a solution made with 25mL of a solution after being titrated with 0.25M HCI in the following amounts a. OmL 12 b. 10mL T c. 38mL 5,04 d. 50mL .40

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT