Ryan Corporation Sells a Commercial Building and Land

question 39

Essay

Ryan Corporation sells a commercial building and land. The sales proceeds attributable to the building is $145,000. When purchased, the building is allocated $75,000 of the purchase price. The firm has depreciated the building using the MACRS rules. The MACRS deductions taken total $60,000. What is the amount and character of Ryan's recognized gain?

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Definitions:

Economic Profits

Refers to the financial gains that exceed the total costs, including both explicit and implicit costs, of a business.

Enter Industry

The act of starting or initiating business operations in a particular market sector.

Long Run

The long run is a time period sufficiently long that all factors of production and costs can be fully adjusted, including plant sizes, machinery, and entry or exit from an industry.

Monopolistically Competitive

A market structure where many firms sell similar but not identical products, allowing them some power to influence prices.