During the Current Year,USACo (A Domestic Corporation) Sold Equipment to FrenchCo,a

question 20

Multiple Choice

During the current year,USACo (a domestic corporation) sold equipment to FrenchCo,a foreign corporation,for $350,000,with title passing to the buyer in France.USACo purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment,all of which were allocated to U.S.-source income.USACo's adjusted basis in the equipment is $20,000 on the date of sale.What is the source of the $330,000 gain on the sale of this equipment?

• A)$330,000 foreign source.
• B)$330,000 U.S. source.
• C)$250,000 foreign source and $80,000 U.S. source.
• D)$250,000 U.S. source and $80,000 foreign source.

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Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, remaining constant regardless of the amount of goods or services produced or sold.

Electricity

A form of energy resulting from the existence of charged particles, used as a power source for machinery and equipment.

Least-squares Regression

A statistical method used to determine the best-fitting line through a set of points by minimizing the squares of the distances of the points from the line.

Variable Component

A portion of a cost or expense that varies directly with production volume or activity level.