Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consultingservices he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment ascompensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below:Assets:CashInvestmentsLandTotalsLiabilities and capital:Nonrecourse liabilitiesLance"RobertTotalsBasis$ 130,000180,000210,000$ 520,000Tax basis$ 190,000165,000165,000$ 520,000DaveFair MarketValue*Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus theirrespective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.)Lancea. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital.Gain or loss recognizedas Ordinary income$ 130,000207,000320,000$ 657,000b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest.$ 190,000233,500233,500$ 657,000Robert

Partnership interest refers to the portion of equity interest in the partnership company. Every…

Answered: Dave LaCroix recently received a 10…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below.] Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments. Land Totals Liabilities and capital: Nonrecourse liabilities Lance* Robert* Totals Tax basis Dave Basis Lance $ 220,000 300,000 100,000 $ 620,000 Robert $ 200,000 210,000 210,000 $ 620,000 *Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.) Fair Market Value b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his…
! Required information [The following information applies to the questions displayed below.] Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land cana Totals Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals Tax basis $ Dave 0 Basis *Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. Tatsuki $ 150,000 200,000 150,000 $ 500,000 b. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest. Robert $ 100,000 200,000 200,000 $…
Required information [The following information applies to the questions displayed below.] Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Fair Market Value Basis Assets: Cash $ 160,000 Investments $ 160,000 290,000 100,000 314,000 200,000 Land Totals $ 550,000 $ 674,000 Liabilities and capital: Nonrecourse liabilities $ 180,000 $ 180,000 Lance* 247,000 185,000 185,000 247,000 Robert* Totals $ 550,000 $ 674,000 *Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.) a. Compute and characterize any gain or loss Dave may have…
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land Basis $ 260,000 300,000 200,000 Totals $ 760,000 Liabilities and capital: $ 180,000 290,000 290,000 $ 760,000 Fair Market Value $ 260,000 322,000 390,000 $ 972,000 $ 180,000 396,000 396,000 Nonrecourse liabilities Tatsuki* Robert* Totals $ 972,000 *Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable.
[The following information applies to the questions displayed below.] Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Fair Market Value Basis Assets: Cash Investments $ 220,000 300,000 100,000 $ 220,000 330,000 260,000 Land Barca Totals $ 620,000 $ 810,000 Liabilities and capital: DLAD Nonrecourse liabilities $ 200,000 $ 200,000 Lance* 210,000 210,000 305,000 305,000 Robert* Totals $ 620,000 $ 810,000 *Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.) c. Prepare a balance sheet for Cirque Capital immediately after…
Following are selected transactions in chronological order of Bayombong Company and its trustee in connection with a sinking fund. a. Cash contribution to the sinking fund, P1,000,000. b. Acquisition of securities at par by the trustee, P700,000. c. The trustee receives interest on the securities, P60,000. d. The trustee pays expenses of P30,000. e. The trustee sells the securities for P800,000 plus accrued interest of P10,000. f. The trustee pays bonds payable of P1,000,000 and interest of P100,000. g. The trustee remits the remaining cash to Bayombong Company. How much was remitted by the trustee to Bayombong Company?
Marigold Corporation had the following activities in 2023: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. (a) Sold land for $196,000. Purchased an FV-NI investment in common shares for $14,200. Purchased inventory for $852,000 with cash. Received $73,000 cash from bank borrowings. Received interest for $11,500. Purchased equipment for $483,000 in exchange for common shares. Issued common shares for $370,000 cash. Recorded an unrealized gain of $3,750 on investments accounted for using the FV-NI model. Purchased investments in bonds, reported at amortized cost for $59,600. Declared and paid a dividend of $17,600 (charged to retained earnings). Sold investments in bonds reported at amortized cost, with a carrying amount of $406,800, for $416,200. Received dividends of $5,000 on FV-NI investments. Calculate the amount that Marigold should report as net cash provided (used) by investing activities on its statement of cash flows under IFRS. Under IFRS, assume Marigold adopts the policy of…
The following selected account balances were taken from the balance sheet of Q Corp. as of December 31, 2021, immediately before the take over of the trustee; Marketable securities P300,000; Inventories P110,000; Land P150,000; Building P400,000; Marketable securities have present market value of P320,000. These securities have been pledged to secure notes payable of P280,000. The estimated worth of inventories of P70,000. However, inventories with book value of P50,000 have been pledged to secure notes payable of P60,000. The realizable value of the inventories pledged estimated to be P40,000. The land and building are estimated to have a total realizable value of P450,000. This property was pledged to secure the mortgage payable of P250,000. What is the amount available for preferred claims and unsecured creditors out of assets pledged with fully secured creditors? Please provide a solution. Thank you!
Marigold Corporation had the following activities in 2023: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. (a) Sold land for $196,000. Purchased an FV-NI investment in common shares for $14,200. Purchased inventory for $852,000 with cash. Received $73,000 cash from bank borrowings. Received interest for $11,500. Purchased equipment for $483,000 in exchange for common shares. Issued common shares for $370,000 cash. Recorded an unrealized gain of $3,750 on investments accounted for using the FV-NI model. Purchased investments in bonds, reported at amortized cost for $59,600. Declared and paid a dividend of $17,600 (charged to retained earnings). Sold investments in bonds reported at amortized cost, with a carrying amount of $406,800, for $416,200. Received dividends of $5,000 on FV-NI investments. (b) Your answer is correct. Calculate the amount that Marigold should report as net cash provided (used) by investing activities on its statement of cash flows under IFRS. Under IFRS, assume Marigold…
Won Hae Hyo Company, an investment entity, provided the following income and expenses for the current year: Dividend income from investments- P9,200,000; Distribution income from trusts- P500,000; Interest income on deposits- P700,000; Income from bank treasury bills- P100,000; Unrealized gain on derivative contract P400,000; Income from dealing in securities and derivatives held for trading- P600,000; Write-down of securities and derivatives held for trading- P150,000; Other income- P50,000; Finance cost- P300,000; Administrative staff costs- P3,800,000; Sundry administrative costs- P1,200,000 interest expense- P1,700,000. What is the total comprehensive income for the current year? A. P3,800,000 B. P4,200,000 C. P4,400,000 D. P9,200,000
Sandhill Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Sandhill to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Sandhill's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)

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