Rivendell Corporation uses the accrual method of accounting and has the following assets as of...
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Accounting
Rivendell Corporation uses the accrual method of accounting and has the following assets as of the end of 2014. Rivendell converted to an S corporation on January 1, 2015.
Asset
Adjusted Basis
FMV
Cash
$
40,000
$
40,000
Accounts receivable
30,000
30,000
Inventory
130,000
60,000
Land
100,000
125,000
Totals
$
300,000
$
255,000
a.
What is Rivendells net unrealized built-in gain at the time it converted to an S corporation? (Leave no answer blank. Enter zero if applicable.)
b.
Assuming the land was valued at $200,000, what would be Rivendells net unrealized gain at the time it converted to an S corporation?
c.
Assuming the original land value but that the inventory was valued at $85,000, what would be Rivendells net unrealized gain at the time it converted to an S corporation? (Leave no answer blank. Enter zero if applicable.)
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