Johnson Inc

question 99

Multiple Choice

Johnson Inc. and C&K Company entered into an exchange of real property. Here is the information for the properties to be exchanged.
Pursuant to the exchange, C&K paid $25,000 cash to Johnson and assumed the mortgage on the Johnson property.
-Compute C&K's gain recognized on the exchange and its tax basis in the property received from Johnson.

• A) $200,000 gain recognized; $662,000 basis in Johnson property.
• B) No gain recognized; $462,000 basis in Johnson property.
• C) No gain recognized; $487,000 basis in Johnson property.
• D) None of the choices are correct.

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Definitions:

Financing Activities

Cash flow activities related to changes in the size and composition of the equity capital and borrowings of an entity.

Cash Receipts

The total amount of money received by a business during a specific period.

Interest and Dividends

Income received from investments, with interest earned on debt investments and dividends received from equity investments.

Operating Activities

Tasks and transactions directly related to the primary business functions of providing goods or services to customers.