Which of the Following Events Causes the Purchaser of an Option

question 72

Multiple Choice

Which of the following events causes the purchaser of an option to add its cost to the basis of the property to which the option relates?

• A)The option is exercised.
• B)The option is sold.
• C)The option lapses.
• D)The option is rescinded.
• E)None of these.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Bonds Payable

Long-term liabilities represented by written promises to pay a specific sum of money, plus interest, at a future date.

Accounts Payable

An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors or suppliers.

Taxes Payable

Liabilities due to federal, state, or local tax authorities within the next fiscal year.