Small Corp

question 5

Multiple Choice

Small Corp. and Big Corp. are equal partners in Medium Enterprises. The partnership has a net worth of $210,000, split 50/50 between the two corporations. Size Co. has been asked to join the partnership in a manner that will not have a tax consequence to the existing partners. When the transaction is complete, all three partners will have an equal interest. To accomplish this structural change, Size Co. must

• A) contribute $105,000 to the partnership treasury.
• B) contribute $210,000 to the partnership treasury.
• C) pay $70,000 to each of the partners.
• D) pay $105,000 to each of the partners.

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Definitions:

Swords

Edged weapons that are longer than knives, with a long metal blade and a hilt, used historically in warfare or dueling.

Total Cost

The sum of fixed costs and variable costs incurred in the production of goods or services.

Units of Output

The quantity of goods or services produced by a firm or industry.

Total Costs

The sum of all the costs incurred in the production of goods or services, including both fixed and variable costs.