Which of the Following Situations Would Not Be Permitted to Defer

question 9

Multiple Choice

Which of the following situations would not be permitted to defer the recognition of any recapture that might arise from the disposition of the asset?

• A) A building that was used for income earning purposes was destroyed in a fire. Insurance proceeds were received which generated recapture. A new building was built one and a half years later.
• B) A half-ton truck that belonged to a construction company was stolen in 20X0. Insurance proceeds were received which generated recapture. The truck was replaced in 20X1.
• C) A customized half-ton truck that belonged to a construction company was sold in 20X0. The proceeds from the sale generated recapture. A new customized truck was purchased fourteen months later in order to carry out the duties of a large contract awarded to the company.
• D) A building that was used for income earning purposes was sold in December 20X0. The proceeds from the sale generated recapture. A new building was purchased in April 20X1. The company's fiscal year-end is December 31^st.

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Definitions:

Merit Raise

An increase in salary based on an employee's performance as assessed through a review process by their employer.

Recognition

The act of identifying someone or something from previous encounters or knowledge, often accompanied by appreciation or acknowledgment.

Praise

Expression of approval, admiration, or gratitude, often used as a form of encouragement or motivation.

Cost-Of-Living Raise

A salary increase designed to match the rate of inflation, ensuring the purchasing power of an employee's income remains constant.