Hazel Purchased a New Business Asset (Five-Year Asset) on September

question 58

Multiple Choice

Hazel purchased a new business asset (five-year asset) on September 30, 2017, at a cost of $100,000. On October 4, 2017, Hazel placed the asset in service. This was the only asset Hazel placed in service in 2017. Hazel did not elect § 179 or additional first-year depreciation. On August 20, 2018, Hazel sold the asset. Determine the cost recovery for 2018 for the asset.

• A)$14,250
• B)$19,000
• C)$23,750
• D)$38,000
• E)None of the above

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Definitions:

Market-to-Book Ratio

A comparison of a company's current market value to its book value, used to assess whether a stock is under or overvalued.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing the current market price of a stock by its earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Book Value Per Share

Book value per share is a financial measure that quantifies the actual value of a company’s stock based on historical costs, expressed as the company's total net assets divided by the number of outstanding shares.

Price Earnings Growth Ratio

A valuation ratio that considers a stock's earnings growth rate in addition to its price-earnings ratio, providing a more complete picture of its value.