Noelle Owns an Automobile Which She Uses for Personal Use

question 184

Multiple Choice

Noelle owns an automobile which she uses for personal use.Her adjusted basis is $45,000 (i.e., the original cost) .The car is worth $22,000.Which of the following statements is correct?

• A)If Noelle sells the car for $22,000, her realized loss of $23,000 is not recognized.
• B)If Noelle exchanges the car for another car worth $22,000, her realized loss of $23,000 is not recognized.
• C)If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss of $23,000.
• D)Only a.and b.are correct.
• E)a., b., and c.are correct.

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Definitions:

Residual Value

The estimated value that an asset will have at the end of its useful life, often used in calculating leases and depreciation.

Financial Lease

A type of lease in which the lessee has use of the asset for most of its useful life, and the lease terms closely resemble the terms of a purchase agreement.

Property Taxes

Taxes levied by local governments on real estate, based on the property's value, used to fund public services and infrastructure.

CRA

Canada Revenue Agency, the federal agency responsible for administering tax laws for the Government of Canada and for most provinces and territories.