Olive Company Sells Factory Equipment with an Adjusted Basis of $30,000

question 1

Multiple Choice

Olive Company sells factory equipment with an adjusted basis of $30,000 for $33,000. Allowable depreciation of $8,000 had been deducted as of the sale date. What is the amount and character of the gain or (loss) on the sale of the equipment?

• A)$- 0 -
• B)$3,000 Section 1245 ordinary income.
• C)$8,000 Section 1245 ordinary income.
• D)$3,000 long-term capital gain, and $8,000 Section 1245 ordinary income.
• E)$3,000 long-term capital gain.

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Definitions:

Transcription

The process by which the DNA sequence in a gene is copied into messenger RNA (mRNA).

DNA Polymerase

Enzyme that carries out DNA replication. Uses a DNA template to assemble a complementary strand of DNA.

Ligase

An enzyme that facilitates the joining of two molecules by forming a new chemical bond, often with the consumption of ATP.

Gyrase

An enzyme that introduces negative supercoils into DNA, which is crucial for DNA replication and transcription, mainly found in bacteria.