Carrie Owns a Business Building with an Adjusted Basis of $95,000

question 22

Multiple Choice

Carrie owns a business building with an adjusted basis of $95,000 and an appraised fair market value of $98,000. The city of Millerville condemns the property for a new highway. The condemnation award is $98,000. Carrie invests $90,000 of the proceeds into a new building on the other side of the city. What is the gain or loss that Carrie must recognize due to the transactions?

• A)No gain or loss
• B)$3,000 gain
• C)$3,000 loss
• D)$8,000 gain
• E)$5,000 loss

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Definitions:

Production Budget

A forecast of the units that must be produced to meet anticipated sales, used in planning the required production levels.

Rolling Budget

A financial plan that is continually updated by adding a new period (month, quarter, etc.) as the current period concludes, ensuring the budget extends a constant length into the future.

Direct Labor Budget

An estimation of the total amount of labor cost that will be required for production over a specific period.

Production Volume

The quantity of products that a manufacturing system produces within a specific period of time.