CBM Inc Realized a $429,000 Gain on Sale of a Commercial

question 3

True/False

CBM Inc. realized a $429,000 gain on sale of a commercial office building that the corporation placed in service in 1993. Accumulated MACRS depreciation on the complex was $311,800. The entire gain is characterized as Section 1231 gain.

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Definitions:

Net Asset Valuation

A method of valuing a company or an investment fund, calculated by subtracting total liabilities from total assets.

Net Income Determination

The process of calculating a company's total earnings after subtracting all expenses, including taxes and costs, from total revenues.

Accrual Accounting

An accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Cash Basis

An accounting method where revenues are recognized when cash is received and expenses are recognized when paid.