Mr Big, a Nonshareholder, Who Is Not a Customer, Potential

question 122

Multiple Choice

Mr. Big, a nonshareholder, who is not a customer, potential customer, governmental entity, or civic group, contributes $60,000 cash and land worth $100,000 to induce Carrie Corporation to relocate to his municipality. Carrie Corporation spent $50,000 of the cash within the first 12 months of his contribution to purchase machinery. The contribution results in

• A)Carrie Corporation recognizes no income as a result of the contribution, the land and machinery have a basis of zero.
• B)Carrie Corporation recognizes $160,000 of income.
• C)Carrie Corporation recognizes no income as a result of the contribution, the land has a basis of zero, and the machinery has a basis of $50,000.
• D)Carrie Corporation recognizes no income as a result of the contribution, the land has a basis of $100,000, and the machinery has a basis of $60,000.

Gain knowledge on capital budgeting decisions and the factors influencing these decisions.

Understand the concept of discounted cash flow valuation and its relevance to investment appraisal.

Recognize the limitations and applications of Average Accounting Return (AAR) in investment decisions.

Grasp the implications of cash flows timing on project valuation and the role of discount rates.

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Definitions:

People-based Services

Services that are directly delivered by individuals to customers, focusing on personal interaction and customization.

Outward Bound

An educational program focusing on adventure-based learning, often involving outdoor activities designed to foster personal growth and social skills.

Nonprofit Organization

An organization whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes, and where surplus revenues are reinvested in the organization.

For-profit Organization

A type of business entity that operates with the primary goal of earning profits for its owners or shareholders.