contestada

A state government condemned Cory Co.'s parcel of real estate. Cory will receive $750,000 for this property, which has a carrying amount of $575,000. Cory incurred the following costs as a result of the condemnation: Appraisal fees to support a $750,000 value $2,500 Attorney fees for the closing with the state 3,500 Attorney fees to review contract to acquire replacement property 3,000 Title insurance on replacement property 4,000 What amount of cost should Cory use to determine the gain on the condemnation?

Respuesta :

raphealnwobi

Answer:

The amount of cost Cory should use to determine the gain on the condemnation is  $581,000

Explanation:

Carrying amount                                                                                    $575,000

appraisal fees to support a $750,000 value                                       $2,500

attorney fees for the closing with the state                                         $3,500

Attorney fees to review contract to acquire replacement property  $3,000

Title insurance on replacement property                                            $4,000

The amount of cost Cory should use to determine the gain on the condemnation compared to $750,000 received from state  = Carrying amount + appraisal fees to support a $750,000 value + attorney fees for the closing with the state  

= $575,000  + $2,500  + $3,500  = $581,000

The Attorney fees to review contract to acquire replacement property  and Title insurance on replacement property  reduces the net proceeds from the state thereby decreasing the gain. The $3,000 and $4,000 amounts pertaining to the replacement property are not associated with the existing property and do not affect the gain on its condemnation.

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