A Factory Building Owned by Amber, Inc

question 20

Multiple Choice

A factory building owned by Amber, Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised value was $425,000. Amber receives insurance proceeds of $390,000. A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000. What is the recognized gain or loss and what is the basis of the new factory building?

• A) $0 and $450,000.
• B) $0 and $460,000.
• C) ($10,000) and $440,000.
• D) ($10,000) and $450,000.
• E) None of the above.

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Definitions:

Practical Intelligence

A type of intelligence that involves the ability to solve everyday problems through adaptive or creative reasoning.

Crystallized Intelligence

The ability to use learned knowledge and experience, which typically increases with age.

Working Memory Capacity

The amount of information a person can hold and manipulate in their working memory at one time.

Mental Processes

are activities of the mind involved in thinking, understanding, learning, and remembering.