A Parent Firm Rarely Chooses to Divest an Undervalued Business

question 3

True/False

A parent firm rarely chooses to divest an undervalued business and return the cash to shareholders either through a liquidating dividend or share repurchase.

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Definitions:

Weighted Average Method

A cost accounting method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all units available for sale.

Equivalent Unit

An equivalent unit is a measure used in cost accounting to express the amount of work done on incomplete products in terms of fully completed units.

Painting Department

A specific section within a manufacturing facility dedicated to the painting of products, often considered in costing for departmental overhead allocation.

FIFO Method

An inventory valuation technique where the first items placed in inventory are the first ones sold, standing for "First In, First Out."