9. Daisy's warehouse is destroyed by a tornado. The warehouse has an adjusted basis of $200,000 when destroyed. Daisy receives an insurance reimbursement check for $300,000 and immediately reinvests $500,000 of the proceeds in a new warehouse. What is Daisy's (1) recognized gain (loss) and (2) basis in the replacement warehouse, respectively, if Daisy chooses to defer all realized gain? A. (1) = $100,000 (2)= $500,000 C. (1) = $0 E. (1) = $0 (2) = $300,000 (2) = $500,000 B. (1) = $100,000 (2)= $400,000 D. (1) = $0 (2) = $400,000
9. Daisy's warehouse is destroyed by a tornado. The warehouse has an adjusted basis of $200,000 when destroyed. Daisy receives an insurance reimbursement check for $300,000 and immediately reinvests $500,000 of the proceeds in a new warehouse. What is Daisy's (1) recognized gain (loss) and (2) basis in the replacement warehouse, respectively, if Daisy chooses to defer all realized gain? A. (1) = $100,000 (2)= $500,000 C. (1) = $0 E. (1) = $0 (2) = $300,000 (2) = $500,000 B. (1) = $100,000 (2)= $400,000 D. (1) = $0 (2) = $400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:9. Daisy's warehouse is destroyed by a tornado. The warehouse has an adjusted basis of $200,000
when destroyed. Daisy receives an insurance reimbursement check for $300,000 and immediately
reinvests $500,000 of the proceeds in a new warehouse. What is Daisy's (1) recognized gain (loss)
and (2) basis in the replacement warehouse, respectively, if Daisy chooses to defer all realized gain?
A. (1) = $100,000 (2)= $500,000
(2) = $300,000
(2) = $500,000
B. (1) = $100,000 (2) = $400,000
D. (1) = $0
C. (1) = $0
(2) = $400,000
E. (1) = $0
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