Identify Which of the Following Statements Is True

question 35

Multiple Choice

Identify which of the following statements is true.

• A)The depreciation recapture potential for a Sec. 1245 property is not included in the definition of a Sec. 751 asset.
• B)For Sec. 751 purposes, "substantially appreciated inventory" means property held for sale to customers whose market value exceeds its adjusted basis.
• C)Inventory for Sec. 751 purposes includes all property except cash, capital assets, and Sec. 1231 assets.
• D)All of the above are false.

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.

Variable Costing

A costing method that includes only variable manufacturing costs in product costs, treating fixed manufacturing overhead as a period expense.

Unit Product Cost

The comprehensive expenditure involved in creating a single product unit, encompassing direct materials, direct labor, and assigned overhead costs.