The ABC Partnership Owns the Following Assets on December 31

question 37

Multiple Choice

The ABC Partnership owns the following assets on December 31. $$\begin{array} { | l | r | r | } \hline & { \text { Basis } } & { \text { FMV } } \\\hline \text { Cash } & \$ 20,000 & \$ 20,000 \\\hline \text { Unrealized receivables } & 0 & 40,000 \\\hline \text { Inventory } & \$ 20,000 & 30,000 \\\hline \text { Land (Sec. } 1231 \text { asset) } & 50,000 & 90,000 \\\hline\end{array}$$ 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.

---

Definitions:

Stimulus Discrimination

The ability of an individual to differentiate between similar stimuli and respond appropriately to each, often used in marketing to distinguish a brand from its competitors.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time, leading to alteration in one of the attitudes, beliefs, or behaviors to reduce the discomfort.

Selective Retention

The tendency of individuals to remember more information that is personally meaningful to them while forgetting irrelevant information.

Stimulus Generalization

The psychological principle that occurs when a response to a specific stimulus is elicited by similar stimuli, applied in marketing to create a familiar response through similar branding.