Questions
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COMM_V 370 101-108 2025W1 COMM 370-Practice Midterm-2025-W1

Multiple dropdown selections

Concerning salvage value when assets are sold, letting: P = purchase price S: salvage value B: residual book value, When S < P:  A. If S = B [ Select ] There is a capital loss. There is recaptured depreciation. No tax adjustments are required. B. If S > B [ Select ] There is recaptured depreciation. There is a capital loss. No tax adjustments are required. C. If S < B [ Select ] No tax adjustments are required. There is a terminal loss. There is recaptured depreciation.

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We start by restating the scenarios and the possible tax outcomes that can occur when an asset is sold for salvage value S, with P as purchase price and B as residual book value. The question presents three subcases (A, B, C) and a set of statements to choose from for each. A. If S = B - 'No tax adjustments are required.' This is correct because when the salvage value equals the book value, there is no gain or loss recognized on disposal relative to the accounting basis, so no depreciation recapture or capital adjustments are triggere......Login to view full explanation

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Concerning salvage value when assets are sold, letting: P = purchase price S: salvage value B: residual book value, When S < P:  A. If S = B [ Select ] No tax adjustments are required. There is recaptured depreciation. There is a capital loss. B. If S > B [ Select ] There is recaptured depreciation. There is a capital loss. No tax adjustments are required. C. If S < B [ Select ] There is recaptured depreciation. There is a terminal loss. No tax adjustments are required.

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