Question

Explain how the cost basis of depreciable property is determined.

Choose the correct choice below.

A.

The cost basis is the amount that will be paid by a willing buyer to a willing seller for a​ property, where each has equal advantage and is under no compulsion to buy or sell.

B.

The cost basis is usually the purchase price of the​ property, plus any sales​ taxes, transportation​ costs, and the cost of installation or improving the property to make it fit for intended use.

C.

The cost basis represents the amount of capital that remains invested in the property and must be recovered in the future through the accounting process.

D.

The cost basis is the original cost basis of the​ asset, adjusted by allowable increases or decreases.

Answer 1