11 October, 17:42

# Darla owns a dress shop called Darla's Darling Dresses. During the past year, Darla sold some assets to upgrade her facility. She sold racks and shelving units for \$600 cash. In addition to the cash, the buyer gave two mannequins worth a total of \$200 to Darla. The racks and shelving units had an original cost of \$2,500 and had accumulated depreciation for tax purposes of \$2,200. Darla's amount realized on the sale is \$ and the adjusted basis in the assets sold is

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1. 11 October, 17:54
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Darla's amount realized on the sale is \$800

Adjusted basis in the assets sold is \$300

Producing a realized gain on the sale of \$500

Explanation:

Amount realized = cash received + FMV of other property + buyer's assumption of seller's liabilities - seller's expenses

Amount realized = 600 + 200 + 0 - 0

= \$800

Adjusted basis = initial basis - cost recovery deductions

Adjusted basis = 2500-2200 = \$300

Gain or loss realized = amount realized - adjusted basis = 800-300

= \$500

Therefore Darla's amount realized on the sale is \$800 and the adjusted basis in the assets sold is \$300, producing a realized gain on the sale of \$500