Hauswirth Corporation sold (or exchanged) some manufacturing equipment in year 0

Question

Hauswirth Corporation sold (or exchanged) some manufacturing equipment in year 0. Hauswirth bought the machinery several years ago for $103,500 and it has claimed $41,600 of depreciation expense against the equipment.

Assuming that Hauswirth receives $21,000 in cash in year 0 and a $87,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth’s gain in year 0 and in year 1.(Round "Gross Profit Percentage" to 3 decimal places. Round your final answers to the nearest whole dollar amount.)

Hauswirth Corporation sold (or exchanged) some manufacturing equipment in year 0. Hauswirth bought the machinery several years ago for $103,500 and it has claimed $41,600 of depreciation expense against the equipment.

Assuming that Hauswirth receives $21,000 in cash in year 0 and a $87,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth’s gain in year 0 and in year 1.(Round "Gross Profit Percentage" to 3 decimal places. Round your final answers to the nearest whole dollar amount.)

Explanation / Answer

Amount Realized Cash $21,000 Notes Receivable $87,000 $108,000 Original Basis $103,500 Less: Accumulated Dep. $41,600 $61,900 Gain (Loss) Realized $46,100 Gross Profit Percentage 42.69% Installment Gain (Loss) in year 0 8964 Installment Gain (Loss) in year 1 37136

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