Identify Which of the Following Statements Is True

question 35

Multiple Choice

Identify which of the following statements is true.

• A) Nonrecognition of gain or loss rules apply to a subsidiary corporation when, pursuant to its complete liquidation, the subsidiary transfers property to a third- party creditor.
• B) The Sec. 332 nonrecognition rules apply to the parent corporation when a subsidiary corporation transfers property to the parent corporation in payment of the subsidiary's debt obligation.
• C) A subsidiary corporation is prevented from recognizing gain or loss when transferring property to its parent corporation in satisfaction of an indebtedness it owes to the parent corporation as part of its complete liquidation.
• D) All of the above are false.

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Definitions:

Variable Overhead Rate Variance

The difference between the expected (standard) cost of the variable overhead based on the actual production volume and the actual variable overhead incurred.

Standard Machine-Hours

A predetermined amount of time that a machine is expected to operate to meet production requirements.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including rent, utilities, and salaries for employees not directly involved in production.

Standard Hours Allowed

The time budgeted for the completion of a task or production of goods, based on efficient operations.