The Revised Act Permits a Corporation to Purchase,redeem,or Otherwise Acquire

question 19

Multiple Choice

The Revised Act permits a corporation to purchase,redeem,or otherwise acquire its own shares unless:

• A) the corporation's total assets after the distribution would be less than the sum of its total liabilities and the maximum amount that would be payable for all outstanding shares having preferential rights in liquidation.
• B) the corporation would be unable to pay its debts as they became due in the usual course of its business.
• C) Both of these.
• D) None of these.

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Definitions:

Straight-Line Amortization

Repayment of a loan or intangible asset in equal installments over a specified period.

Loss On Bond Retirement

Loss on bond retirement occurs when the redemption price of a bond is higher than its carrying value on the issuer’s books, leading to a financial loss.

Premium On Bonds Payable

The amount by which the bond's selling price exceeds its face value, representing additional cost to the issuer.

Loss On Bond Retirement

A financial loss that occurs when a bond is redeemed before its maturity date and the redemption value exceeds its carrying value.