Question

Capital assets include:________. A. A corporation's accounts receivable from the sale of its inventory. B. Seven-year MACRS property used in a corporation's trade or business. C. A manufacturing company's investment in U.S. Treasury bonds. D. A corporate real estate developer's un-improved land that is to be subdivided to build homes, which will be sold to customers.

Answer 1

The correct answer is letter "C": A manufacturing company's investment in U.S. Treasury bonds.

Step-by-step explanation:

A capital asset is one that a company plans to own for more than a year and makes use of in generating revenue. Capital assets are listed as equity, land, and facilities on the firm's balance sheet. Typical capital assets are land, buildings, plants, vehicles, trucks, furniture, computers, and manufacturing machinery or any other investment such as government treasury bonds.

Answer 2

The correct answer is

C. A manufacturing company's investment in U.S. Treasury bonds.

Step-by-step explanation:

Choice "c" is correct. Investment assets of a taxpayer that are not inventory are capital assets. The manufacturing company would have capital assets including an investment in U.S. Treasury bonds.

Land is usually a capital asset, but when it is effectively inventory, as when it is used by a developer to be subdivided, it is excluded from the statutory definition of capital assets.

so the correct answer is option "C"