Question

How is the amount realized on an asset disposition calculated?

1) Minus adjusted basis of property being disposed of
2) Minus cash paid
3) Plus cash received
4) Minus seller's expenses
5) Plus buyer's assumption of liabilities
6) Minus seller's assumption of liabilities
7) Plus FMV of other property received

Answer 1

The amount realized on an asset disposition is computed by summing up any cash received, the fair market value of other property received, and the buyer's assumption of liabilities, then subtracting any seller's expenses.

Step-by-step explanation:

The amount realized on an asset disposition is calculated by taking the sum of all money received and the fair market value (FMV) of any other property received, then adding the amount of any liabilities assumed by the buyer, and finally subtracting any selling expenses paid by the seller. Here is how it's commonly broken down:

1. Add the cash received from the sale.
2. Add the FMV of other property received, if applicable.
3. Add the buyer's assumption of liabilities related to the asset.
4. Subtract any seller's expenses related to the sale, such as commission fees or legal costs.

The adjusted basis of the property being disposed of, and the seller's assumption of liabilities, do not factor into the amount realized; these are considered when calculating gain or loss on the disposition.