Milton Is Experiencing Cash Flow Problems During the Current Year

question 119

Multiple Choice

Milton is experiencing cash flow problems during the current year.Rather than foreclose on the $120,000 mortgage loan on his principal residence,his bank agrees to reduce the debt to $90,000.Prior to the debt reduction,Milton's total assets were $400,000 and his total liabilities were $390,000.How much income must Milton recognize from the reduction of his bank loan?

• A)- 0 -
• B)$10,000
• C)$20,000
• D)$30,000

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Definitions:

Perfect Information

Refers to a situation where all relevant data and outcomes are fully known to all parties involved.

Expected Value

The weighted average of all possible outcomes of a random variable, considering the probabilities of each outcome.

Decision Table

A tool used in both computing and decision analysis, indicating actions to be taken based on various conditions.

Conditional Value

The value of an asset, item, or scenario that depends on the fulfillment of certain conditions or the occurrence of specific events.