The ABC Partnership Owns the Following Assets on December 31

question 6

Multiple Choice

The ABC Partnership owns the following assets on December 31. The indication that ABC owns substantially appreciated inventory is

• A) the total FMV of all assets except cash is greater than their total basis.
• B) the FMV of all assets except land is $90,000 while their bases is $40,000.
• C) the FMV of the inventory is $30,000 while its adjusted basis is $20,000.
• D) the FMV of the inventory and unrealized receivables is $70,000 while their adjusted bases is $20,000.

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Definitions:

FIFO Method

A method in accounting for managing inventories and financial matters where the first items placed in inventory are the first ones to be used or sold.

Equivalent Units

A concept used in cost accounting to express the amount of work done by an incomplete production process on units of output, converted into an equivalent number of fully completed units.

FIFO Method

"First In, First Out," an inventory valuation method where goods first added to inventory are the first ones to be sold.

Weighted-Average Method

A technique used in various contexts, such as inventory valuation and cost accounting, that calculates an average taking into account the proportionate importance of each component.