Steve and stephanie pratt purchased a home in spokane, washington, for $417,500. they moved into the home on february 1 of year 1. they lived in the home as their primary residence until june 30 of year 5, when they sold the home for $747,500 assume the original facts, except that stephanie moves in with steve on march 1 of year 3 and the couple is married on march 1 of year 4. under state law, the couple jointly owns steve’s home beginning on the date they are married. on december 1 of year 3, stephanie sells her home that she lived in before she moved in with steve. she excludes the entire $80,000 gain on the sale on her individual year 3 tax return. what amount of gain must the couple recognize on the sale in june of year 5?
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Ответ:
c. $4,000
Explanation:
Depreciation expense is the appropriate portion of a company's fixed asset's cost that is being used up during accounting period. Under straight-line method, depreciation expense is calculated by formula:
Straight-Line Depreciation Expense =(Cost − Residual Value) /Useful Life of the Asset
For year 2, depreciation expense = ($25,000-$5,000)/5 = $4,000
Noted:
Depreciation Expense is different from Accumulated depreciation. Accumulated depreciation is the total amount of depreciation expense for an fixed asset that is recorded on the balance sheet. In this situation, the Accumulated depreciation after 2 years is:
Depreciation expense in year 1 + Depreciation expense in year 2 = $8,000