The Tax Treatment Regarding the Sale of Existing Assets That

question 113

Multiple Choice

The tax treatment regarding the sale of existing assets that are sold for more than the book value and more than the original purchase price results in

• A) an ordinary tax benefit.
• B) no tax benefit or liability.
• C) recaptured depreciation taxed as ordinary income.
• D) a capital gain tax liability and recaptured depreciation taxed as ordinary income.

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Definitions:

Translation Exchange Rates

The rates used to convert the financial statements of a company into the currency of a different country for reporting purposes.

Historical Rate

Refers to the exchange rate between two currencies at a past date, useful for historical financial analysis.

Pooling of Interests Method

An accounting method that treats the companies involved in a merger or acquisition as if they have always been a single entity, combining their financial statements without recognizing any new goodwill.

Business Combinations

Transactions or other events in which an acquirer gains control over one or more businesses.