Question

What is included in the calculation of the amount realized upon the sale of a capital asset? (Check all that apply.)

A) The original cost of the capital asset is sold

B) Cash received by the seller

C) The fair market value of any other property received by the seller

D) Depreciation taken on the asset in prior years is deducted

E) Broker's fees and other selling costs are deducted

Answer 1

The calculation of the amount realized upon the sale of a capital asset includes the original cost, cash received, and fair market value of other property received.

Step-by-step explanation:

The calculation of the amount realized upon the sale of a capital asset includes several factors:

1. The original cost of the capital asset: This is the amount the seller initially paid for the asset.
2. Cash received by the seller: This is the actual amount of money the seller receives from the buyer.
3. The fair market value of any other property received by the seller: Sometimes, instead of cash, the seller may receive other property in exchange for the capital asset.

Depreciation taken on the asset in prior years is not deducted from the amount realized, and broker's fees and other selling costs are also not deducted.