Cal Exchanges an Apartment Building (Including Land) with an Adjusted

question 36

Multiple Choice

Cal exchanges an apartment building (including land) with an adjusted basis of $55,000 (and fair market value of $90,000) for a piece of undeveloped land valued at $80,000 and $10,000 cash. As a result of the exchange, Carl paid $14,000 of fees. What is Carl's recognized gain on the exchange?

• A) 0
• B) $10,000
• C) $35,000
• D) $21,000

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Definitions:

Cash Account

An account that records all cash transactions, including cash receipts and cash payments, within a business.

Raw Materials Inventory

The total cost of all raw materials that are yet to be used in the production process.

Standard Costs

The preset costs for delivering a product or service under normal conditions.

Pounds

Pounds refer to a unit of mass used in the imperial system, or can also refer to the British currency (GBP).