Z Corp Elected S Corporation Status When It Was Formed

question 31

Multiple Choice

Z Corp elected S corporation status when it was formed.It purchased land for $15,000 and constructed a warehouse to store inventory for its business.During the past taxable year, Z distributed the warehouse and land, valued at $200,000, to its shareholders.The original cost to construct the building was $120,000, and straight-line depreciation of $100,000 has accumulated.The values are allocated as follows: $$\begin{array}{l}&\text { Fair Market Value }&\text { Adjusted Basis }&\text { Appreciation }\\\text { Land } & \$ 60,000 & \$ 15,000 & \$ 45,000 \\\text { Building } & 140,000 & 20,000 & 120,000 \\\text { Total } & \$ 200,000 & \$ 35,000 & \$ 165,000\end{array}$$ Assuming sufficient AAA, what is the effect on the shareholders' bases for this distribution?

• A)$35,000 increase
• B)$165,000 increase
• C)$35,000 decrease
• D)$200,000 decrease

Understand the concept of managerial innovations and their examples.

Grasp the importance of job enrichment as a managerial innovation.

Comprehend the significance of extracting innovative ideas from the external environment.

Understand open innovation and its requirements for success.

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Definitions:

Keiretsu

A set of companies with interlocking business relationships and shareholdings in Japan, forming a tight-knit alliance to work toward mutual success.

Company Coalition

A strategic alliance or partnership between companies aimed at achieving a set of common objectives or enhancing competitive advantage.

Japanese Concept

Management and production practices originating in Japan that emphasize efficiency, continuous improvement, and worker involvement, such as Kaizen and Lean Manufacturing.

Bullwhip Effect

A phenomenon in supply chains where small fluctuations in demand at the retail level cause increasingly larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.