Midnight Corporation Transferred Part of Its Assets to Noon Corporation

question 9

Multiple Choice

Midnight Corporation transferred part of its assets to Noon Corporation in exchange for all of Noon's stock. Midnight distributed all of Noon's stock pro rate to Midnight's shareholders. What is this type of reorganization?

• A)split-off
• B)spin-off
• C)split-up
• D)dividend distribution

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Definitions:

Premium on Bonds Payable

The amount by which the cash received from issuing bonds exceeds their face value, signifying an interest rate lower than the market rate.

Adjunct Liability Account

An account that is associated with a liability and increases its amount, unlike a contra liability account which reduces it.

Call Option

A financial contract giving the buyer the right but not the obligation to buy an asset at a specified price within a certain period.

Bonds

Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental, where the borrower commits to paying back the principal along with interest.