Parent Corporation Owns 70% of Sam Corporation's Single Class of Stock

question 21

Multiple Choice

Parent Corporation owns 70% of Sam Corporation's single class of stock. This year, Parent Corporation purchases for cash the remaining 30% of Sam Corporation's stock from four individual investors pursuant to a tender offer. A plan of liquidation is approved by Sam Corporation's shareholders during the last month of this year, and Sam Corporation's assets are distributed by year-end to Parent Corporation in exchange for all of Sam's outstanding stock. Parent Corporation should

• A)not recognize any gains and losses on the redemption.
• B)recognize gains and losses on the redemption.
• C)recognize gains but not losses on the redemption.
• D)recognize losses but not gains on the redemption.

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Definitions:

Fainting

A sudden, temporary loss of consciousness, often due to a decrease in blood flow to the brain.

Limited Function

Refers to a condition or situation where the capabilities or actions of a system, organ, or individual are restricted.

Fetus Size

A measurement that refers to the dimensions or growth development of a fetus during pregnancy, typically assessed via ultrasound.

Inside the Uterus

Referring to the internal environment of the uterus, often used in medical contexts.