Josh Donated a Painting to the Local Art Museum

question 20

Multiple Choice

Josh donated a painting to the local art museum.He purchased the painting twenty years ago for $34,000,and its appraised FMV at date of gift was $115,000.Which of the following statements about this donation is true?

• A)Josh must recognize an $81,000 long-term capital gain and is allowed a $115,000 charitable contribution deduction.
• B)Josh recognizes no gain and is allowed a $115,000 charitable contribution deduction.
• C)Josh recognizes no gain and is allowed a $34,000 charitable contribution deduction.
• D)None of the above is true.

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Definitions:

Weighted-Average Method

An inventory costing approach that calculates the cost of goods sold and ending inventory based on the average cost of all items.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, to accurately measure output.

Conversion

In accounting, it refers to the process of changing raw materials into finished products, including the costs associated with such a transformation.

Weighted-Average Method

An inventory costing method that calculates the cost of units for sale during a period by averaging the costs of all similar goods available.