Stan and Billie Have Decided to Divorce

question 69

Essay

Stan and Billie have decided to divorce. As part of the divorce settlement, Billie received stock valued at $200,000 that had a basis of $120,000; Stan received their home that had a basis of $240,000 but a fair market value at the time of the divorce of $400,000. Two years after the divorce, Billie sells the stock for $300,000 and a year later Stan sells the home for $600,000 after the twins leave for college.
a. How much is Billie's realized and recognized gain or loss on the sale of the stock?
b. How much is Stan's realized and recognized gain or loss on the sale of the home.

Identify the potential impacts of profit-based measures on managerial behavior.

Elucidate the role of invested capital in measuring and valuing business performance.

Understand the concepts of return on investment (ROI) and its influencing factors.

Calculate and interpret residual income and understand its implications for investment decisions.

---

Definitions:

Warner Bros.

An American entertainment company and one of the major film studios, known for producing films, television shows, and music, as well as distributing media and entertainment.

Unique Style

A distinctive approach or method in various forms of art that sets an individual or work apart from others, often characterized by originality and consistency.

Supervisory System

A framework or set of protocols used in various fields to oversee and guide the work or performance of individuals or groups.

Irving Thalberg

A pioneering American film producer in the early 20th century, known for his work at MGM where he developed a strong system for producing films and working with leading filmmakers and actors.