In Order to Induce Yellow Corporation to Build a New

question 62

Multiple Choice

In order to induce Yellow Corporation to build a new manufacturing facility in Knoxville, Tennessee, the city donates land (fair market value of $400,000) and cash of $100,000 to the corporation. Several months after the donation, Yellow Corporation spends $450,000 (which includes the $100,000 received from Knoxville) on the construction of a new plant located on the donated land.

• A) Yellow recognizes income of $100,000 as to the donation.
• B) Yellow has a zero basis in the land and a basis of $450,000 in the plant.
• C) Yellow recognizes income of $500,000 as to the donation.
• D) Yellow has a zero basis in the land and a basis of $350,000 in the plant.
• E) None of the above.

Comprehend the mechanisms for resolving conflicts and disputes in business.

Analyze how societal views and legislation related to business ethics evolve over time.

Understand the concept of mandated boundaries of conduct and their importance in business practices.

Realize the significance of ethical compliance programs in preventing and detecting corporate misconduct.

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Definitions:

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset over a specified period.

Lease Inception

The point at which the lease agreement is executed, signifying the beginning of the lease term.

Related Liability

An obligation that is directly associated with the operating activities or financial situation of a business.

Operating Lease

A lease agreement allowing one to use an asset without ownership, typically with shorter terms than a finance lease.