A Shareholder Bought 2,000 Shares of Zee Corporation for $90,000

question 30

Multiple Choice

A shareholder bought 2,000 shares of Zee Corporation for $90,000 several years ago.When the stock is valued at $200,000, Zee redeems the shares in exchange for 6,000 shares of Yea Corporation stock and a $20,000 car not wanted by Yea.This transaction meets the requirements of § 368. Which of the following statements is true with regard to this transaction?

• A)The shareholder has a realized gain of $130,000.
• B)The shareholder has a postponed gain of $110,000.
• C)The shareholder has a basis in the Yea stock of $90,000.
• D)The shareholder has a recognized gain of $20,000.
• E)All of the above statements are true.

Understand the concept of long-run adjustments in purely competitive markets including entry and exit of firms.

Comprehend that in the long run, purely competitive markets yield zero economic profits due to the entry or exit of firms.

Recognize the conditions under which firms will either enter or leave purely competitive markets.

Identify the characteristics and outcomes of constant-cost, increasing-cost, and decreasing-cost industries in the long run.

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Definitions:

Accrued Revenue

Revenue earned but not yet received in cash or recorded at the statement date, typically recognized in accrual-basis accounting.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded at the end of a reporting period.

Payback Periods

The duration of time it takes to recover the cost of an investment through the investment's cash flows.