The FASB Define Related Parties as

question 85

Multiple Choice

The FASB define related parties as

• A)affiliates of the company
• B)investments accounted for using the cost method of accounting for investment securities
• C)trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by management
• D)principal debtors of the company and their immediate families
• E)employees of the company and their immediate families
• F)both A and C
• G)both B and D
• H)both D and E

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Definitions:

Section 1245

A section of the U.S. Internal Revenue Code that deals with the tax treatment of depreciable property and requires the recapture of depreciation upon sale of the property as ordinary income.

Section 1231

A tax provision related to the treatment of gains and losses on property used in a trade or business or held for the production of income.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Short-Term Capital Loss

A loss realized from the sale of a capital asset, such as stock, held for one year or less, which can be used to offset capital gains for tax purposes.