A Factory Building Owned by Amber, Inc

question 48

Multiple Choice

A factory building owned by Amber, Inc.is destroyed by a hurricane.The adjusted basis of the building was $400,000 and the appraised value was $425,000.Amber receives insurance proceeds of $390,000.A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000.What is the recognized gain or loss and what is the basis of the new factory building?

• A)$0 and $450,000.
• B)$0 and $460,000.
• C)($10,000) and $440,000.
• D)($10,000) and $450,000.

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Definitions:

Target Point

In negotiations, it refers to the best outcome each party hopes to achieve from the negotiation process.

Starting Point

The initial position or condition at the beginning of an activity or process.

Major Concession

A significant compromise or adjustment made by a party in a negotiation, often to reach an agreement.

Comparable Magnitude

A level of similarity or equivalence in size, impact, or importance between two or more elements.