Pure Action Cycles Inc

question 110

Essay

Pure Action Cycles Inc., a bicycle manufacturer, has a net capital loss in 2016 of $64,000. It had net capital gains of $21,500 in 2015, $45,000 in 2014, $10,000 in 2013 (but suffered a net operating loss in 2013), and $8,000 of net capital gain in 2011. What is the net capital gain in 2015 after the carryback is applied?

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Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Functional Depreciation

A decrease in the usefulness or value of an asset resulting from obsolescence, wear and tear, or age.

Fixed Asset

A long-term tangible piece of property that a firm owns and uses in its operations to generate income.

Book Value

The net value of a company's assets minus its liabilities and preferred stock, reflecting the amount that shareholders would theoretically receive if the company was liquidated.