Four Individuals Form Chickadee Corporation Under § 351 Both Jane and Walt Receive Stock in Chickadee Corporation Equal

question 95

Multiple Choice

Four individuals form Chickadee Corporation under § 351.Two of these individuals, Jane and Walt, made the following contributions: $\begin{array}{lrr}&&\text { Fair Market }\\& \underline{\text {Adjusted Basis}}& \underline{\text {Value}}\\\text { From Jane- }\\\text { Cash } & \$ 360,000 & \$ 360,000 \\\text { Patent } & -0- & 40,000 \\\\\text { From Walt- } & & \\\text { Equipment (depreciation claimed of } \$ 100,000) & 240,000 & 370,000\end{array}$ Both Jane and Walt receive stock in Chickadee Corporation equal to the value of their investments.

• A)Jane must recognize income of $40,000; Walt has no income.
• B)Neither Jane nor Walt recognize income.
• C)Walt must recognize income of $130,000; Jane has no income.
• D)Walt must recognize income of $100,000; Jane has no income.
• E)None of the above.

Comprehend the application and importance of Generally Accepted Accounting Principles (GAAP).

Distinguish between single-entry and double-entry accounting systems and their applicability to business.

Identify common managerial missteps in finance that can lead to business failure.

Grasp the accounting equation and its components.

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Definitions:

Motives

The reasons or desires that drive an individual to act in a particular way.

Theory X Manager

Describes a management style that assumes employees are inherently lazy and need to be closely supervised and controlled.

Worker Involvement

The participation or engagement of employees in the decision-making processes and operations of their workplace.

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives.