Identify Which of the Following Statements Is True

question 31

Multiple Choice

Identify which of the following statements is true.

• A)The method of accounting used by shareholders involved in a complete liquidation is relevant when determining the year in which the shareholder's gain or loss should be reported.
• B)An accrual method of accounting taxpayer recognizes his/her realized gain on a corporate liquidation when there has been actual or constructive receipt of the liquidating distribution(s).
• C)If a shareholder assumes or acquires liabilities of the liquidating corporation, the amount of these liabilities does not reduce the amount realized by the shareholder.
• D)All of the above are false.

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Definitions:

Pension Expense

The company's cost in a specific period for providing pension benefits to employees during that period.

Funding Agency

An organization that provides financial support for various projects or enterprises.

Unrecognized Prior Service Cost

Costs related to pension plan benefits that have been earned by employees in prior periods but have not yet been recognized in financial statements.

Pension Expense

The cost recognized in an accounting period related to an entity's pension plan, which includes service cost, interest cost, expected return on plan assets, and any amortization.