The amount of $225,000 will be the would be the basis of the apartment building for income tax purposes.
Basically, the cost basis is the purchase cost which is $225,000.
The fair market value and appraised cost does not have anything to do with tax basis for income tax purposes.
In conclusion, the amount of $225,000 will be the would be the basis of the apartment building for income tax purposes
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Answer:
It is a relatively easy method to apply.
Explanation:
When accounting for a subsidiary, equity method is followed, whenever the shareholding percentage is equal or more than 20%.
But here, the parent company uses, initial value method for internal reporting.
Under initial value method the value of investment in subsidiary is recorded at cost, and then adjusted at year end at fair value, this clearly shows the gain or loss at each year end from such investment as per market norms.
There is no statutory requirement to follow such initial value method for internal reporting.
The correct reason therefore, is:
It is a relatively easy method to apply.
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They expect to not be having to regulating the industry anymore, or concern them selves regarding regulations of the said industry.
When firms compete by offering unique product features rather than competing on price, <u>non-price competition</u> occurs; it is when businesses employ tactics to boost sales and market shares without lowering prices.
What is non-price competition?
In non-price competition, a company "seeks to distinguish its product or service from competing items on the basis of features like design and workmanship," according to a marketing strategy. Because it exists between two or more producers who sell goods and services at the same prices but seek to expand their respective market shares by non-price factors like marketing strategies and higher quality, it frequently happens in imperfectly competitive markets.
Types of Non-Price Competition:
Marketing involves a range of approaches (based round the 4Ps), including product differentiation, advertising, promotion and distribution
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Before making an investment, investors look at a company's financial accounts because they believe that bigger profit margins will result in a better return. The company's reputation encourages investors to make risk-free investments with ease.
What is investing?
Buying an asset or thing in the future with the expectation that it will produce income or increase in value is referred to as "investing."
Investors value financial statements because they contain a wealth of information about a company's balance sheet, income statement, and cash flow statement.
Investors pay attention to a company's profit margins since they result in a higher rate of return. The company's annual report from the prior year and goodwill of the company show investor to easily invest without any risk.
As a result, an investor must be interested of the company's financial statements and goodwill.
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