Flora Company Owed $95,000 to the National Bank

Flora Company owed $95,000 to the National Bank.Flora borrowed the funds to purchase land from another party.The land serves as security for the loan.

A) If the bank accepts $90,000 in full payment of the debt, and Flora is solvent after the transfer, Flora must reduce the cost of the land by $5,000.
B) If the bank forecloses on the land (takes the land and cancels the debt) with a basis of $115,000 and fair market value of $90,000, when Flora is solvent, Flora must recognize a $5,000 gain.
C) If Flora transfers to the bank other property, with a basis of $90,000 and a fair market value of $95,000, in full payment of the debt, Flora must reduce its basis in the land by $5,000.
D) If the bank accepts the land in full payment of the debt, and Flora is solvent after the transfer, when the basis in the land is $90,000 and the amount of the debt is $95,000, Flora must recognize $5,000 gain.
E) None of the above.