Rick Transferred the Following Assets and Liabilities to Warbler Corporation

question 81

Multiple Choice

Rick transferred the following assets and liabilities to Warbler Corporation. ​
In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000) .

• A) Rick has a recognized gain of $60,000.
• B) Rick has a recognized gain of $75,000.
• C) Rick's basis in the stock of Warbler Corporation is $270,000.
• D) Warbler Corporation has the same basis in the assets received as Rick does in the stock.
• E) None of the above.

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Definitions:

Planning Budget

A planning budget is formulated prior to a budget period and is based on management's objectives, serving as a guide for financial planning and performance evaluation.

Flights

Refers to scheduled air travel trips or could imply the launching or operation of aircraft.

Facility Expenses

Costs associated with operating and maintaining physical buildings or structures used in the production of goods or services.

Spending Variance

The difference between the actual amount spent and the budgeted or expected amount, which can be favorable or unfavorable.