Flora Company Owed $100,000 to the National Bank

Flora Company owed $100,000 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 $10,000.
B) If the bank forecloses on the land (takes the land and cancels the debt) with a basis of $125,000 and fair market value of $90,000,when Flora is solvent,Flora must recognize a $10,000 gain.
C) If Flora transfers to the bank other property,with a basis of $90,000 and a fair market value of $100,000,in full payment of the debt,Flora must reduce its basis in the land by $10,000.
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 $100,000,Flora must recognize $10,000 gain.
E) None of the above.