Identify Which of the Following Statements Is True

question 21

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 assets.
• D)All of the above are false.

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a relevant activity, such as machine hours or labor hours.

Underapplied

Describes a situation where the allocated overhead costs in accounting are less than the actual overhead costs incurred.

Overapplied

A scenario in which the overhead cost assigned to manufacturing exceeds the overhead that was actually incurred.

Direct Labor-Hours

A measure of the labor directly involved in manufacturing a product, represented in hours.