Ajax and Brindel Corporations Have Filed Consolidated Returns for Several

question 9

Multiple Choice

Ajax and Brindel Corporations have filed consolidated returns for several calendar years. Ajax acquires land for $60,000 on January 1 of last year. On September 1 of this year, Ajax sells the land to Brindel for $90,000. The basis and holding period for the land acquired by Brindel are:

• A) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { Holding Period Begins On } \\
• \hline \$ 60,000 & \text { january } 2 \text { of last year } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { Holding Period Begins On } \\
• \hline \$ 90,000 & \text { january } 2 \text { of last year } \\
• \hline
• \end{array}\]
• C) \(\begin{array}{|l|l|}
• \hline\text { Basis } & \text { Holding Period Begins On } \\
• \hline\$ 90,000 & \text { September } 2 \text { of this year } \\
• \hline
• \end{array}\)
• D) none of the above

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Definitions:

Salaries Payable

A liability account that records the amounts of wages earned by employees that have not yet been paid to them.

Salaries Expense

An accounting item that represents the total amount paid to employees in the form of salaries over a specific period of time.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Prepaid Insurance

An asset account that represents insurance payments made in advance for future coverage periods.