Which of the Following Transactions Results Solely in §1245 Gain

question 118

Multiple Choice

Which of the following transactions results solely in §1245 gain?

• A)Sale of machinery held for less than one year.
• B)Sale of machinery held for more than one year, where the gain realized exceeds the accumulated depreciation.
• C)Sale of machinery held for more than one year, where the accumulated depreciation exceeds the gain realized.
• D)Sale of land held for more than one year, where the amount realized exceeds the adjusted basis.
• E)None of the choices are correct.

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on an activity driver.

Fixed Manufacturing Overhead

Costs in the manufacturing process that remain constant regardless of the production volume, including equipment depreciation and building lease expenses.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods or services.

Direct Labor

The labor costs of employees who are directly involved in the production of goods, an element of production costs.