Acme Inc and Beamer Company Exchanged Like-Kind Assets

question 4

Multiple Choice

Acme Inc. and Beamer Company exchanged like-kind assets. Acme's asset had a $240,000 FMV and $117,300 adjusted tax basis, and Beamer's asset had a $225,000 FMV and a $168,200 adjusted tax basis. Beamer paid $15,000 cash to Acme as part of the exchange. Which of the following statements is true?

• A) Acme's realized gain is $122,700 and recognized gain is -0-.
• B) Beamer's realized gain is $56,800 and recognized gain is $15,000.
• C) Acme's basis in its newly acquired asset is $117,300.
• D) Beamer's basis in its newly acquired asset is $168,200.

---

Definitions:

Stockholders' Equity

Shareholders' Equity reflects the stake of owners in a company, determined by subtracting the firm's total liabilities from its total assets.

Expense

Outflows or other using up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Revenue

The total income generated by a company from its business activities, including sales of goods or services before any expenses are deducted.