Which of the Following Qualify as Replacement Property Under the Involuntary

question 73

Multiple Choice

Which of the following qualify as replacement property under the involuntary conversion rules?
I.Mayfield Ice Cream Company's production plant is destroyed by a hurricane. The insurance proceeds are used to replace the plant with a refrigerated storage container.
II.Mayfield Ice Cream Company's production plant is destroyed by a fire. They sign a five year lease for a replacement production facility, and the insurance proceeds are then used to buy an office building
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Comparative Advantage

The ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost compared to others.

Geegaws

Trinkets or small, flashy objects of little value; often used to denote cheap or kitschy items.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity.

Geegaws

Ornamental objects of no substantial value, often considered trinkets or gadgets.