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ACCT 3013 Exam 2 Quiz Questions and Answers Grade A+
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ACCT 3013 Exam 2 Quiz Questions and Answers Grade A+
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1|Page | © copyright 2024/2025 | Grade A+ACCT 3013 Exam 2 Quiz Questions
and Answers Grade A+
Qualifying property received in a nontaxable exchange has a cost basis for
tax purposes.
✓ false (qualifying property takes a substituted basis)
A taxpayer who receives or pays boot in a nontaxable exchange must
recognize gain to the extent of the FMV of the boot.
✓ false (payment of boot does not trigger gain recognition)
Signo Incorporated's current year income statement includes a $21,000 gain
realized on the exchange of an old business asset for a new business asset. If
the exchange is nontaxable, Signo has a $21,000 favorable permanent
book/tax difference.
✓ false (the book/tax difference is temporary)
Reiter Incorporated exchanged an old forklift for new office furniture. This
exchange qualifies as a nontaxable like-kind exchange.
✓ false
Master01 | October, 2024/2025 | Latest update
, 1|Page | © copyright 2024/2025 | Grade A+
In a like-kind exchange in which both properties are subject to a mortgage,
both parties to the exchange are treated as receiving boot equal to the relief
of their respective mortgage.
✓ false (only the amount of net debt relief is treated as boot by the party
with the net debt relief)
LiO Company transferred an old asset with a $13,600 adjusted tax basis in
exchange for a new asset worth $11,000 and $1,500 cash. Which of the
following statements is false?
A. if the exchange is taxable, LiO recognizes a $1,100 loss
B. if the exchange is nontaxable, LiO recognizes no loss
C. if the exchange is nontaxable, LiO's basis in the new asset is $12,100
D. none of these chioces are false
✓ None of these statements are false.
✓ A. (11,000+1,500)-13,600=(1,100)
✓ C. 11,000+1,100=1,200
Oxono Company realized a $74,900 gain on the exchange of one asset for
another asset (no cash was included in the exchange). The assets were like-
kind properties. Oxono reported the gain as revenue on its financial
statements. Which of the following is true?
Master01 | October, 2024/2025 | Latest update
, 1|Page | © copyright 2024/2025 | Grade A+
(fave/unfave temp/perm)
✓ The exchange resulted in a favorable temporary book/tax difference.
Mr. Weller and the Olson Partnership entered into an exchange of investment
real property. Mr. Weller's property was subject to a $428,000 mortgage,
which Olson assumed. Olson's property was subject to a $235,000 mortgage,
which Mr. Weller assumed. Which of the following statements is true? (who
paid and received what amounts of boot?)
✓ Mr. Weller received $193,000 boot; Olson paid $193,000 boot.
✓ (428,000-235,000)=193,000
Gem Company's manufacturing facility was destroyed by a flood. The
facility's adjusted basis was $665,000, and Gem received an $850,000
insurance reimbursement. Within 18 months of the flood, Gem rebuilt the
facility at a total cost of $975,000. Which is Gem's basis in the new facility?
✓ $790,000
✓ 975,000-(850,000-665,000)
Mr. Slake sold 1,580 shares of publicly traded DDL stock (tax basis $49,240) for
$40,000 cash on February 13. He paid $43,000 cash to purchase 1,600 DDL
shares on March 2. Compute Mr. Slake's loss recognized on the February 13
sale and determine his tax basis in the 1,600 shares.
Master01 | October, 2024/2025 | Latest update
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