Ask Question
17 October, 03:41

8. A factory building owned by Amber, Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised value was $425,000. Amber receives insurance proceeds of $390,000. A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000. What is the recognized gain or loss and what is the basis of the new factory building?

+2
Answers (1)
  1. 17 October, 06:13
    0
    The recognized loss is $10,000 and the basis of the new factory building is $450,000

    Explanation:

    The computations are shown below:

    Gain or loss = Insurance proceeds received - the adjusted basis of the building

    = $390,000 - $400,000

    = ($10,000)

    And, the basis of the new factory building would be $450,000 as it includes only construction cost

    All other information which is given is not relevant. Hence, ignored it
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “8. A factory building owned by Amber, Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers