James and Ellen Connors,who Are Both 50 Years Old and Married,sell

question 43

Essay

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2013 for $950,000.They have lived in the home for 20 years.The basis of the home is $350,000.They purchased a new home for $1,000,000 in August 2013.After living in that home for 219 days,the Connors were forced to sell their new home in 2014 for $1,300,000 and move to another climate due to Ellen's severe health problems.
a.What is the amount of gain recognized on the home sale in 2013?
b.What is the amount of the gain recognized on the home sale in 2014?

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Definitions:

Unusual Item

A nonrecurring or rare event that impacts a company's financial statements, not related to the ordinary activities of the business.

Income Statement

A financial report summarizing the revenues, expenses, and profits over a specified period, usually a fiscal quarter or year.

Disposal of a Segment

The process of eliminating a division, department, or segment of a business through sale, closure, or bankruptcy, impacting financial statements.

Accounting Principle

Guidelines and rules that govern the accounting process, ensuring accuracy and consistency in financial reporting.