Lu is interested in purchasing the assets of Idaho Potato Chip Company.Idaho's assets are:
All of the following statements are correct except:
A)If Lu pays $225,000 for the assets, Lu's basis in the tangible assets will be $200,000.
B)If Lu buys the stock of Idaho for $225,000, the basis in the assets will be $118,400.
C)If Lu pays $225,000 for the assets, Lu will have a basis in the building of $129,000.
D)If Lu buys the stock of Idaho for $225,000, he will recognize goodwill of $25,000.

Question

Lu is interested in purchasing the assets of Idaho Potato Chip Company.Idaho's assets are:  ​
All of the following statements are correct except:
A)If Lu pays $225,000 for the assets, Lu's basis in the tangible assets will be $200,000. 
B)If Lu buys the stock of Idaho for $225,000, the basis in the assets will be $118,400. 
C)If Lu pays $225,000 for the assets, Lu will have a basis in the building of $129,000. 
D)If Lu buys the stock of Idaho for $225,000, he will recognize goodwill of $25,000.

Quizplus · Accepted Answer

The Answer of Lu is interested in purchasing the assets of Idaho Potato Chip Company.Idaho's assets are:  ​
All of the following statements are correct except:
A)If Lu pays $225,000 for the assets, Lu's basis in the tangible assets will be $200,000. 
B)If Lu buys the stock of Idaho for $225,000, the basis in the assets will be $118,400. 
C)If Lu pays $225,000 for the assets, Lu will have a basis in the building of $129,000. 
D)If Lu buys the stock of Idaho for $225,000, he will recognize goodwill of $25,000.

Lu Is Interested in Purchasing the Assets of Idaho Potato