A Trust Account Holds Two Buildings as Its Assets

question 8

Multiple Choice

A trust account holds two buildings as its assets. Building 1 originally cost $150,000 and Building 2 originally cost $210,000. It is now the 21st anniversary of the trust, and the assets have not been transferred to the beneficiary. The undepreciated capital cost of Building 1 is $85,000 and its market value is $200,000. The undepreciated capital cost of Building 2 is $145,000 and its market value is $190,000. Which costs will be the
Deemed acquisition values of the buildings for the trust?

• A) B1 = $150,000; B2 = $210,000
• B) B1 = $200,000; B2 = $190,000
• C) B1 = $85,000; B2 = $145,000
• D) B1 = $200,000; B2 = $210,000

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Definitions:

Present Value

The current financial worth of a prospective amount of money or sequence of monetary flows, considering a set rate of return.

Annuity

An investment vehicle that provides a steady flow of payments to a person, often utilized as a source of income for those in retirement.

Equivalent

Being equal in value, function, or meaning, often used in comparisons or equivalency assessments.

Lease Financing

A method of funding for acquiring assets, where the item is leased rather than purchased outright, often with an option to buy at the end.