Dandy Corporation’s business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandy’s insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy? Group of answer choices $ 0 $50,000 gain. $100,000 loss. $150,000 gain.
Dandy Corporation’s business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandy’s insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy? Group of answer choices $ 0 $50,000 gain. $100,000 loss. $150,000 gain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Dandy Corporation’s business building was destroyed by an earthquake this year and was located in a federally declared disaster area. Dandy had an adjusted basis in the building of $350,000. The fair market value of the building before the earthquake was $500,000. However, the building was insured for only $250,000 which was the amount received by Dandy’s insurance company. Dandy uses these funds and other resources to purchase a new business building for $400,000 by the end of the year. How much gain or loss must be recognized by Dandy?
Group of answer choices
$ 0
$50,000 gain.
$100,000 loss.
$150,000 gain.
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