mc_q_14_16

mc_q_14_16 - MULTIPLE CHOICE QUESTIONS Q14. Janna Limited...

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MULTIPLE CHOICE QUESTIONS Q14. Janna Limited (JL) is a manufacturing company. In November 1998, JL purchased a parcel of land, for $1,500,000 on which it planned to build a new facility. Due to the downturn in the economy and the corresponding decrease in demand for their product, the company agreed, in June 2008, to sell the land to an interested party for $3,000,000. $1,000,000 of the proceeds were received in June 2008 with the remaining $2,000,000 due in June 2010. JL has a December 31 year end for taxation purposes and has been advised that capital gain treatment will be given to the transaction. Costs associated with the sale of the land totalled $150,000. (i) JL can claim a reserve on the above sale at December 31, 2008 of: (a) $1,000,000 (b) $1,080,000 (c) $900,000 (d) $1,212,000 (ii) JL can claim a reserve on the above sale at December 31, 2009 of: (a) $900,000 (b) $1,000,000 (c) $810,000 (d) $450,000 Q15. A. Winestock owned two homes for a two-year period from 2005 to 2007. He had
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mc_q_14_16 - MULTIPLE CHOICE QUESTIONS Q14. Janna Limited...

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