In Order to Get the Cardinal Corporation to Build a Plant

question 165

Essay

In order to get the Cardinal Corporation to build a plant in the area, Union County gives it land worth $900,000. The land was purchased by the county many years ago for $50,000.
a.How much income, if any, must Cardinal Corporation recognize for receiving the land?
b.What basis will Cardinal Corporation have in the land?

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Definitions:

Nonexcludability

Refers to a situation in a market where it's impossible to exclude individuals from using a good or service, often associated with public goods.

Chemical Industry

A sector that produces and sells chemicals and substances obtained by transforming raw materials through chemical processes.

Economic Efficiency

Economic efficiency occurs when all resources are allocated optimally to serve each individual or entity in the best way while minimizing waste and inefficiency.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices.