Glen Owns a Building That Is Used in Business

question 51

Multiple Choice

Glen owns a building that is used in business.The building is worth $200,000,but is subject to a mortgage of $40,000.Glen's basis in the building is $120,000.Glen exchanges the building for investment land worth $150,000 plus $10,000 cash.In addition,the other party assumes the mortgage which will be held for investment.Glen must recognize a gain of

• A)$0.
• B)$10,000.
• C)$50,000.
• D)$80,000.

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Definitions:

Operating Expenses

The costs associated with the normal day-to-day operations of a business, excluding costs directly related to producing goods.

Capital Budgeting

The method of assessing and choosing investments for the long term that align with the company's objective of maximizing wealth.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing the difference between its cost and salvage value evenly over its useful life.

Capital Budgeting

involves the evaluation and selection of long-term investments that are in line with the goal of maximizing the value of a firm.