Joyce's Office Building Was Destroyed in a Fire (Adjusted Basis

question 89

Multiple Choice

Joyce's office building was destroyed in a fire (adjusted basis of $350,000; fair market value of $400,000) .Of the insurance proceeds of $360,000 she receives, Joyce uses $310,000 to purchase additional inventory and invests the remaining $50,000 in short-term certificates of deposit.She received only $360,000 because of a co-insurance clause in her insurance policy.What is Joyce's recognized gain or loss?

• A)$0
• B)$10,000 loss
• C)$10,000 gain
• D)$40,000 gain

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Definitions:

Activity-Based Costing

An accounting method that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Activity-Based Costing

A pricing strategy that pinpoints various tasks within a company and allocates the expense of each task across all goods and services based on their real usage.

Batches

Groups of items or materials processed or produced together in a manufacturing or production process.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of the resources.