Doppia Company Transferred an Old Asset with a $68,750 Adjusted

question 34

Multiple Choice

Doppia Company transferred an old asset with a $68,750 adjusted tax basis in exchange for a new asset worth $90,000 and $10,000 cash. Which of the following statements is false?

• A) The old asset's FMV is $100,000.
• B) If the exchange is nontaxable, Doppia's recognized gain is $10,000.
• C) If the exchange is nontaxable, Doppia's tax basis in the new asset is $78,750.
• D) None of these statements is false.

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Definitions:

Trust Receipt

A trust receipt is a financial document issued by a bank to a buyer who has obtained a loan to purchase goods, where the buyer agrees to hold the goods in trust for the bank until the loan is repaid.

Inventory Loans

Short-term loans or lines of credit secured by a company’s inventory, used to purchase products for sale.

Factoring Accounts Receivable

A financial transaction where a business sells its accounts receivable to a third party at a discount to immediately raise cash.

Commercial Paper

An unsecured, short-term debt instrument used by corporations to finance their immediate needs.