A Barn, Destroyed by fiRe, Had a Basis of $40,000

question 61

Multiple Choice

A barn, destroyed by fire, had a basis of $40,000. fte owner received $50,000 in insurance proceeds. fte barn was replaced by another barn costing $45,000. fte basis of the new barn is:

• A) $40,000
• B) $45,000
• C) $50,000
• D) $55,000
• E) $60,000

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Definitions:

Investments

Financial assets purchased with the expectation they will generate income or appreciate in the future.

Balance Sheet

The balance sheet is a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Telephone Expense

This represents the cost associated with telephone usage and services for a business, classified as an office expense.

Fees Earned

Fees earned refer to the income a company receives from providing services to its clients, typically recorded in the income statement.