Acme IncAnd Beamer Company Exchanged Like-Kind Production Assets

question 33

Multiple Choice

Acme Inc.and Beamer Company exchanged like-kind production 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.

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Definitions:

Inflation

The pace at which the average cost of products and services escalates, causing the value of money to diminish.

Interest Rates

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage rate.

Beta

A measure of the volatility, or systematic risk, of a security or portfolio compared to the market as a whole.

Portfolio

A diverse collection of financial investments like stocks, bonds, commodities, and real estate held by an individual or an institutional investor.