1. On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $560,880. Strike received a trade-in allowance of $28,080. The old equipment had an initial cost of $208,000 and had accumulated depreciation of $176,800. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

Gain of $28,080

Loss of $28,080

Loss of $3,120

no loss or gain will be recorded

2. A building with an appraisal value of $130,423 is made available at an offer price of $156,533. The purchaser acquires the property for $32,768 in cash, a 90-day note payable for $28,858, and a mortgage amounting to $56,029. The cost basis recorded in the buyer's accounting records to recognize this purchase is

$130,423

$117,655

$123,765

$156,533

3.

Which of the following is not a characteristic of a corporation?

The financial loss that a stockholder may suffer from owning stock in a public company is limited.

Cash dividends paid by a corporation are deductible as expenses by the corporation.

Corporations are required to file federal income tax returns.

A corporation can own property in its name.

4.

A used machine with a purchase price of $36,254, requiring an overhaul costing $8,477, installation costs of $5,323, and special acquisition fees of $20,132, would have a cost basis of

$44,731

$104,118

$70,186

$36,254