Connor Owes $4 Million and Has Assets of Only $1

question 66

Multiple Choice

Connor owes $4 million and has assets of only $1 million.He declares and files personal and business bankruptcy and his creditors approve a payment plan of $.25 per dollar.Connor has a net operating loss carryover of $2 million.The remaining 75 percent of his debt will be canceled.Connor must recognize income of

• A)$0.
• B)$1 million.
• C)$2 million.
• D)$3 million.

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Definitions:

Direct Expense

A cost that can be directly attributed to a specific cost object, such as a product, department, or project, making it easy to trace the expense directly to its source.

Profit Center

A part of an organization that is directly responsible for generating its own revenue and profits.

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in operating a business and not expected to be converted to cash in the current or next fiscal year.

Yearly Income

The total amount of income generated by a person or entity in one fiscal year.