Marge Purchases the Kentwood Krackers,a AAA Level Baseball Team,for $1

question 106

Essay

Marge purchases the Kentwood Krackers,a AAA level baseball team,for $1.5 million.The appraised values of the identified assets are as follows:
$\begin{array}{lr}\text { Prepaid season tickets } & \$ 150,000 \\\text { Stadium lease } & 400,000 \\\text { Player contracts } & 500,000 \\\text { Equipment } & 100,000\end{array}$ The Krackers have won the pennant for the past two years.Determine Marge's adjusted basis for the assets of the Kentwood Krackers.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded when cash is received or paid, respectively.

External Reporting

The process of providing financial statements and other pertinent information to outside entities, such as investors, creditors, and regulatory agencies.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, showing how much profit a company makes on sales.

Net Income

The sum a company holds as profit once it has subtracted expenses and taxes from its aggregate revenue.