Identify Which of the Following Statements Is True

question 80

Multiple Choice

Identify which of the following statements is true.

• A)Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock. Able Corporation (New York)is liquidated. This exchange is a Type F reorganization.
• B)Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment.
• C)A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes.
• D)All of the above are false.

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Definitions:

Indirect

Costs or actions that are not directly traceable to a specific product, service, or activity but are necessary for the business to operate.

Direct

Expenses or costs that can be directly traced to a specific cost object, like a product, department, or project.

Cost Object

Anything for which cost data are desired. Examples of cost objects are products, customers, geographic regions, and parts of the organization such as departments or divisions.

Period Costs

Costs that are not directly tied to the production process and are expensed in the period in which they occur.