Proctor Inc

question 6

Multiple Choice

Proctor Inc. was incorporated in 2004 and adopted a calendar year. Here is a schedule of Proctor's net Section 1231 gains and (losses) reported on its tax returns through 2009. In 2010, Proctor recognized a $25,000 gain on the sale of business land. How is this gain characterized on Proctor's tax return?

• A) $25,000 Section 1231 gain
• B) $19,700 ordinary gain and $5,300 Section 1231 gain
• C) $15,900 ordinary gain and $9,100 Section 1231 gain
• D) $25,000 ordinary gain

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Definitions:

Assembly Activity Cost Pool

A grouping of all costs related to the assembly process in activity-based costing, used to allocate costs to products or services.

Labor-Hour

A measure of work accomplished, recorded, or billed based on the number of hours worked.

Activity-Based Costing

A method of allocating overhead and indirect costs to products or services based on the activities that drive those costs.

Cost Of Serving

The total expenses incurred while delivering a service or product to a customer.