Allen Transfers Marketable Securities with an Adjusted Basis of $120,000

question 81

True/False

Allen transfers marketable securities with an adjusted basis of $120,000, fair market value of $300,000, for 85% of the stock of Heron Corporation. In addition, he receives cash of $40,000. Allen recognizes a capital gain of $40,000 on the transfer.

---

Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was placed in service, reducing its book value.

Cash Dividends

are profit distributions made by a corporation to its stockholders in the form of cash.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit or loss over a specific period of time.