Which of the Following Is Not a Rationale as to Why

question 210

Multiple Choice

Which of the following is not a rationale as to why a firm may want to divest itself of some of its assets?

• A) To raise cash.
• B) To get rid of unprofitable operations.
• C) To get rid of some assets received in an acquisition.
• D) To cash in on some profitable operations.
• E) To attain horizontal diversification.

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Definitions:

Impaired

Refers to assets that are recognized at a value higher than their recoverable amount, leading to an impairment loss that must be recorded.

Impairment Losses

Financial accounting losses recognized when the carrying amount of an asset exceeds its recoverable amount, indicating the asset has suffered a decline in value.

Shareholders

Individuals or entities that own shares in a company, giving them ownership stakes and certain rights regarding its operation.

Parent Entity

A company that holds a controlling interest in another company or subsidiary, having significant influence over its operations and financial decisions.