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4 March, 05:25

Acme Inc. and Beamer Company exchanged like-kind production assets. Acme's asset had a $240,000 FMV and $117,300 adjusted tax basis, andBeamer's asset had a $225,000 FMV and a $168,200 adjusted tax basis. Beamer paid $15,000 cash to Acme as part of the exchange. Which of the following statements is true? A. Acme's realized gain is $122,700 and recognized gain is - 0-. B. Beamer's realized gain is $56,800 and recognized gain is $15,000. C. Acme's basis in its newly acquired asset is $117,300. D. Beamer's basis in its newly acquired asset is $168,200

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  1. 4 March, 05:43
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    The answer is; C. Acme's basis in it's newly acquired asset is $117,300

    Explanation:

    Step 1: Determine Acme's Cost basis, realized gain and recognized gain

    Acme's cost basis=$117,300

    realized gain=Fair market value+cash received-cost basis

    where;

    Fair market value=$240,000

    cash received=$15,000

    cost basis=$117,300

    replacing;

    realized gain=240,000+15,000-117,300=137,700

    Acme had a recognized gain of $137,700

    Recognized gain=$15,000 in cash

    Step 2: Determine Beamer's Cost basis, realized gain and recognized gain

    Beamer's cost basis=$168,200+15,000=$183,200

    realized gain=Fair market value-cost basis

    where;

    Fair market value=$225,000

    cost basis=$183,200

    replacing;

    realized gain=225,000+183,200=$41,800

    Acme had a recognized gain of $0

    Recognized gain=$0

    The answer is; Acme's basis in it's newly acquired asset is $117,300
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