Which of the Following Situations Would Not Be Permitted to Defer

question 6

Multiple Choice

Which of the following situations would not be permitted to defer the recognition of any recapture that might arise from the disposition of an asset?

• A) A building that was used for income earning purposes was destroyed in a fire. Insurance proceeds were received which generated recapture. A new building was built one and a half years later.
• B) A half-ton truck that belonged to a construction company was stolen in 20x0. Insurance proceeds were received which generated recapture. The truck was replaced in 20x1.
• C) A customized half-ton truck that belonged to a construction company was sold in 20x0. The proceeds from the sale generated recapture. A new customized truck was purchased fourteen months later in order to carry out the duties of a large contract awarded to the company.
• D) A building that was used for income earning purposes was sold in December 20x0. The proceeds from the sale generated recapture. A new building was purchased in April 20x1. The company's fiscal year-end is December 31^st.

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Definitions:

Conditioned Response

A learned response to a previously neutral stimulus that has been repeatedly paired with an unconditioned stimulus.

Punishment

The process by which a stimulus or event weakens or reduces the probability of the response that it follows.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic or anxiety responses through gradual exposure to the feared object or situation, paired with relaxation exercises.

Stimulus Generalization

The tendency for the conditioned response to be evoked by stimuli that are similar to the stimulus that was originally conditioned.