The Partition Effect in Relation to a Group of Companies

question 68

Multiple Choice

The partition effect in relation to a group of companies arose when:

• A) It was not permitted under corporations law to consolidate an entity that was not a company. This resulted not only in the non-company entity not being consolidated, but also all the entities (company or otherwise) that it controlled not being consolidated.
• B) The minority shareholders in a number of companies controlled by a parent entity organised themselves to block the transfer of funds within a group.
• C) Companies in a group co-ordinated to transfer assets in such a way as to protect part of the group from being taxed, thus reducing the total tax owing for the group as a whole.
• D) Dividends were declared and paid in such a way as to manage cash reserves within a group.
• E) None of the given answers.

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Definitions:

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Spanish Missionary Period

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French and Indian War

A conflict between France and Britain from 1754 to 1763 in North America, part of the greater Seven Years' War, with Native American tribes playing key roles on both sides.

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