Johnson Inc Pursuant to the Exchange, C&K Paid $25,000 Cash to Johnson

question 12

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. $$\begin{array} { l r r } & \text { Johnson } & C \& K \\\text { FMV } & \$ 900,000 & \$ 675,000 \\\text { Adjusted tax basis } & \mathbf { 5 9 3 , 0 0 0 } & 462,000 \\\text { Mortgage } & \mathbf { 2 0 0 , 0 0 0 } & - 0 \text { - }\end{array}$$ 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 above

Determine the minimum acceptable price for special orders and product pricing.

Evaluate make or buy decisions using relevant costing.

Assess the financial implications of discontinuing a product or department.

Apply the concept of contribution margin in decision-making.

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Definitions:

Plaintiff's Consent

Agreement by a plaintiff to a course of action or condition in the context of legal proceedings.

Defamation

Defamation is the act of communicating false statements about a person that injure the reputation of that person.

Prove Negligence

The legal requirement to establish that a party failed to take reasonable care, resulting in harm or damage to another.

Recover

The process of regaining possession or control of something lost or taken away, or of obtaining compensation or reparation for loss or damage.