Identify Which of the Following Statements Is True

question 61

Multiple Choice

Identify which of the following statements is true.

• A)Depreciation recapture rules do not override the nonrecognition of gain or loss rules.
• B)The acquisition of liabilities by an acquiring corporation will trigger a gain.
• C)A target corporation will recognize a gain when it distributes stock to its shareholders.
• D)The basis of property acquired in a reorganization is its FMV.

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Definitions:

Additional Paid-in Capital

Additional paid-in capital is the amount of money shareholders have invested in the company above the par value of the shares, representing excess capital that is not classified as profit.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities.

Balance Sheet

A financial statement that shows a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Continuity Assumption

A fundamental accounting principle assuming that a business will continue to operate indefinitely, maintaining its financial and operational policies without the intention or necessity of liquidation.