H Corporation Distributed Land with a Fair Market Value of $100,000

question 39

Multiple Choice

H Corporation distributed land with a fair market value of $100,000 (basis $20,000) to Y Corporation, a 70 percent shareholder.As a result, the amounts of the distribution to Y Corporation and basis of land to Y Corporation are

• A)$80,000 and $80,000
• B)$100,000 and $100,000
• C)$100,000 and $20,000
• D)$80,000 and $20,000

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Definitions:

Activity-Based Costing

A costing methodology that assigns overhead and indirect costs to related products and services based on their usage.

Selling Price

The price at which a product or service is offered to the buyer.

Direct Labor Cost

The total cost of all labor directly involved in the production of goods or services.

Activity-Based Costing

A financial allocation practice that designates overhead and indirect costs to related products and services, determined by the activities they necessitate.