Teco IncAnd MW Company Exchanged Like-Kind Production Assets

question 11

Multiple Choice

Teco Inc.and MW Company exchanged like-kind production assets.Teco's asset had an $80,000 FMV and $53,900 adjusted tax basis,and MW's asset had an $87,500 FMV and a $28,100 adjusted tax basis.Teco paid $7,500 cash to MW as part of the exchange.Which of the following statements is false?

• A)Teco's realized gain is $26,100 and recognized gain is -0-.
• B)MW's realized gain is $59,400 and recognized gain is $7,500.
• C)Teco's basis in its newly acquired asset is $61,400.
• D)MW's basis in its newly acquired asset is $35,600.

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Definitions:

Standard Hours (SH)

Standard Hours (SH) refer to the estimated time considered necessary to perform a task or produce a good under normal conditions, used for planning and efficiency analysis.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of those materials.

Attainable Standard

A performance measure based on achievable levels of efficiency and effectiveness under current conditions.

Perfection Standard

An idealistic benchmark for performance or quality that may be impossible to achieve but serves as a high goal.