​Xena and Xavier Form the XX LLC

question 38

Multiple Choice

​Xena and Xavier form the XX LLC.Xena contributes cash of $20,000,land (basis = $40,000; fair market value = $25,000) ,equipment (basis = $0; fair market value = $35,000) ,and inventory (basis = $30,000; fair market value = $40,000) .Xavier contributed $100,000 of cash.How much is the partnership's basis in the land,equipment,and inventory,and how much is Xena's basis in the partnership interest?

• A)​$25,000 land, $0 equipment, $30,000 inventory; $55,000 partnership interest.
• B)​$40,000 land, $0 equipment, $30,000 inventory; $90,000 partnership interest.
• C)​$25,000 land, $35,000 equipment, $30,000 inventory; $105,000 partnership interest.
• D)​$40,000 land, $35,000 equipment, $40,000 inventory; $135,000 partnership interest.

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Definitions:

Optimal Prices

The price point that maximizes a firm's profits or achieves the best balance between sales volume and profit margins.

Economies of Scale

The financial benefits that companies gain as a result of their size, production volume, or operational scope, where the cost for each unit of production typically falls as the scale expands.

Third-Degree Price Discrimination

A pricing strategy where different prices are charged to different groups of consumers for the same product, based on elasticity of demand.

Monopoly Power

The ability of a single seller to set prices and control the market for a good or service without significant competition.