Ch 7 Homework(1)

Ch 7 Homework(1) - Ch 7 Homework: Property Dispositions 1....

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Ch 7 Homework: Property Dispositions 1. Kigin Company spent $240,000 to clean up hazardous waste that had contaminated land used in Kigin's business. Which of the following statements is true ? A. Kigin must capitalize the $240,000 expenditure to the cost of the land. B. If Kigin purchased the land in an uncontaminated state, it can deduct the $240,000 because the expenditure is merely returning the land to its original condition. C. Kigin can deduct the $240,000 as a repair expense. D. None of the above is true. 2. Kassim Company purchased an asset by paying $35,000 cash and giving the seller its 3-year note for $240,000. Which of the following statements is true ? A. Kassim's book basis and tax basis in the asset is $275,000 B. Kassim's book basis is $275,000, but its tax basis is $35,000. C. Kassim's book basis and tax basis in the asset is $35,000. D. If Kassim is a cash basis taxpayer, its initial tax basis in the asset is zero. 3. In an inflationary economy, the use of FIFO maximizes the cost of goods sold and minimizes
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This note was uploaded on 10/16/2011 for the course MGT 135 taught by Professor Andersen during the Summer '11 term at UCSD.

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Ch 7 Homework(1) - Ch 7 Homework: Property Dispositions 1....

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