Sara constructs a small storage shed for resale to customers and incurs the following costs:
$$\begin{aligned}
\$ 3,000 & \text { Direct labor } \
1,500 & \text { Direct materials } \
700 & \text { Other direct costs } \
300 & \text { Allocated indirect costs }
\end{aligned}$$
a.What is Sara's basis in this storage shed?
b.Sara normally sells the storage sheds for $7,000 each.John,one of the workers who builds the storage sheds,buys one for $5,000.What is John's basis in his storage shed?

Question

Sara constructs a small storage shed for resale to customers and incurs the following costs:
 $$\begin{aligned}
\$ 3,000 & \text { Direct labor } \
1,500 & \text { Direct materials } \
700 & \text { Other direct costs } \
300 & \text { Allocated indirect costs }
\end{aligned}$$ 
a.What is Sara's basis in this storage shed?
b.Sara normally sells the storage sheds for $7,000 each.John,one of the workers who builds the storage sheds,buys one for $5,000.What is John's basis in his storage shed?

Quizplus · Accepted Answer

The Answer of Sara constructs a small storage shed for resale to customers and incurs the following costs:
 $$\begin{aligned}
\$ 3,000 & \text { Direct labor } \
1,500 & \text { Direct materials } \
700 & \text { Other direct costs } \
300 & \text { Allocated indirect costs }
\end{aligned}$$ 
a.What is Sara's basis in this storage shed?
b.Sara normally sells the storage sheds for $7,000 each.John,one of the workers who builds the storage sheds,buys one for $5,000.What is John's basis in his storage shed?

Sara Constructs a Small Storage Shed for Resale to Customers