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Colleen Operates a Business as a Sole Proprietorship

question 121

Multiple Choice

Colleen operates a business as a sole proprietorship. She purchased a computer for $10,000 last year. The computer is five-year recovery property for MACRS purposes and is depreciated under the regular MACRS rules. This year, Colleen incorporates the business and transfers the computer to the new corporation on July 20. The depreciation on the computer for this year allocable to the sole proprietorship is

Understand how to adjust the investment account balance for changes in ownership percentage, including acquisition costs, fair value adjustments, and amortization of excess cost over book value.

Understand the accounting for sales of investment in shares under the equity method, including gain/loss calculation and adjustments to the investment account.

Comprehend how a company's share of cumulative losses affects accounting for its investment under the equity method.

Understand and apply the equity method for accounting investments.

Definitions:

Assets

Resources owned by a business that have economic value and can be used to meet debts or commitments.

Companionship

A close relationship between individuals where they share company and support, often providing emotional comfort and friendship.

Widowed

Refers to the status of a person whose spouse has died and who has not remarried.

Instrumental Activity

Tasks that allow an individual to live independently, such as managing finances, handling transportation, or performing household chores.