Adam Transfers Inventory with an Adjusted Basis of $120,000,fair Market

question 90

True/False

Adam transfers inventory with an adjusted basis of $120,000,fair market value of $300,000,for 85% of the stock of Heron Corporation.In addition,he receives cash of $30,000.Adam recognizes a capital gain of $30,000 on the transfer.

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Definitions:

Assets

Resources owned by a business or individual that are expected to provide future economic benefits.

Liabilities

Liabilities are financial obligations or debts that an entity owes to external parties, expected to be settled over time through the transfer of economic benefits.

Owner's Equity

The residual interest in the assets of a business after all liabilities are subtracted, representing ownership's claim on assets.

Expenses

Expenses are the outflows or the utilization of assets or incurring of liabilities during a period in the course of generating revenue.