8. a factory building owned by amber, inc. is destroyed by a hurricane. the adjusted basis of the building was $400,000 and the appraised value was $425,000. amber receives insurance proceeds of $390,000. a factory building is constructed during the nine-month period after the hurricane at a cost of $450,000. what is the recognized gain or loss and what is the basis of the new factory building?

Varto company has 9,400 units of its sole product in inventory that it produced last year at a cost of $23 each. this year’s model is superior to last year’s, and the 9,400 units cannot be sold at last year’s regular selling price of $42 each. varto has two alternatives for these items: (1) they can be sold to a wholesaler for $8 each, or (2) they can be reworked at a cost of $251,100 and then sold for $34 each. prepare an analysis to determine whether varto should sell the products as is or rework them and then sell them.