Classify Each of the Following Statements

question 117

Multiple Choice

Classify each of the following statements:
-Under her father's will, Faith is to receive 10,000 shares of GE common stock. Eight months after her father's death, Faith disclaims the 10,000 shares.

• A)No taxable transfer occurs.
• B)Gift tax applies.
• C)Estate tax applies.

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Definitions:

Long-term Investments

Investments held for an extended period, typically more than a year, such as bonds, stocks, or real estate, aiming for long-term benefits.

Bonds Payable

Long-term liabilities representing money a company owes to bondholders.

Cash Dividend

A payment made by a company to its shareholders, typically in cash, out of its current or retained earnings.

Direct Method

An approach in accounting that allocates service department costs directly to producing departments without considering service departments' interrelations.