Norman Exchanges a Machine He Uses in His Pool Construction

question 110

Multiple Choice

Norman exchanges a machine he uses in his pool construction business for a used machine worth $6,000 to use in the same business. He purchased the machine 3 years ago for $22,000 and had taken depreciation of $9,000 on the machine. In the exchange, Norman also receives $3,000 of cash. As a result of the exchange,
I.Norman realizes a loss of $4,000 on the exchange.
II.Norman's basis in the acquired machine is $13,000.
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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:

Passively

In a manner that involves acceptance or submission without active response or resistance.

Stupor

A state of near-unconsciousness or insensibility, often resulting from illness, intoxication, or shock, characterized by a significant decrease in reaction to external stimuli.

Acute Schizophrenia

A condition marked by sudden and severe episodes of psychosis, characterized by distorted thinking, perceptions, emotions, and behavior.

Rapidly

Occurring in a short time or at great speed.