In March,a Flood Completely Destroyed Three Delivery Vans Owned by Totle

question 84

Multiple Choice

In March,a flood completely destroyed three delivery vans owned by Totle Inc.Totle's adjusted tax basis in the vans was $48,900.Totle received a $90,000 reimbursement from its property insurance company,and on September 8,it purchased one new delivery van for $70,000.Compute Totle's recognized gain on loss on the involuntary conversion and its tax basis in the new van.

• A)No recognized gain or loss; $48,900 basis in the van
• B)$20,000 recognized gain; $70,000 basis in the van
• C)$20,000 recognized gain; $48,900 basis in the van
• D)None of the above

Understand the impact of a bargain purchase option on the classification and advantages of a lease.

Evaluate the potential financial and accounting implications of a lease agreement.

Appreciate the significance of disclosing lease agreements in financial statements.

Recognize the tax implications and restrictions related to leasing for tax avoidance purposes.

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Definitions:

In-Group Favoritism

The tendency to favor members of one's own group over those from external groups in terms of trust, favor, or privilege.

Tajfel's Theory

This social psychology theory posits that group membership creates in-group/self-categorization and enhancement in ways that favor the in-group at the expense of the out-group.

Award Money

Financial compensation given as a reward for excellence, achievement, or winning in various contexts such as contests, competitions, or incentives.

Social Loafing

Social loafing refers to the phenomenon where individuals exert less effort when working in a group than when working alone.