Bob owns 100 shares of ACT Corporation common stock with a basis of $3,500 and a FMV of $12,000. Bob receives 10 stock rights as a nontaxable distribution, and no basis is allocated to the stock rights. With each stock right, Bob may acquire one share of stock for $25. Bob exercises all 10 stock rights. The total basis of the newly acquired stock is
A. $250.
B. $350.
C. $1,200.
D. $0.
Answer: A
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The income statement is a statement that summarizes revenues and expenses for a period
a. True b. False Indicate whether the statement is true or false
The Premium on Bonds Payable account is shown on the balance sheet as
a. a contra asset. b. a reduction of an expense. c. an addition to a long-term liability. d. a subtraction from a long-term liability.
Financial statements issued for the use of parties external to the enterprise are the primary responsibility of the
a. management of the enterprise. b. stockholders of the enterprise. c. independent auditors of the enterprise. d. creditors of the enterprise.
An example of direct matching of an expense with revenues would be
a. depreciation expense. b. office salaries expense. c. direct labor costs incurred to produce inventory sold during a period. d. advertising expense.