Which of the Following Statements Is Always Correct Regarding Assets

question 12

Multiple Choice

Which of the following statements is always correct regarding assets acquired by a newly formed partnership? If a partner contributes:

• A)Depreciable property: the partnership treats the property as newly acquired depreciable property, and may claim a § 179 deduction.
• B)Unrealized (cash-basis) receivables: the partnership will report a capital gain when the receivable is collected.
• C)Inventory (in the partner's hands): the partnership reports ordinary income if the property is held as a capital asset and sold within five years of the contribution date.
• D)Land valued at less than its basis: the partnership reports a § 1231 loss if the property is sold at a loss.

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Definitions:

Translation Exposure

The potential for a company's financial statements to be affected by changes in exchange rates when foreign operations are translated into the parent company's currency.

Exchange Rates

The value of one currency for the purpose of conversion to another.

Purchasing Power

The buying power of a currency, measured by how many goods or services can be acquired with a single unit of that currency.

Imports And Exports

The act of bringing goods and services into one country from another (imports) and sending goods or services from one country to another (exports).