Which of the Following Is Not True of a Split-Off

question 141

Multiple Choice

Which of the following is not true of a split-off?

• A) A split-off is a variation of a spin-off
• B) Parent company shareholders receive shares in a subsidiary in return for surrendering their parent company shares
• C) Split-offs are best suited for disposing of a less than 100 percent investment stake in a subsidiary,
• D) A split-off reduces the parent firm's earnings per share.
• E) The split-off reduces the pressure on the spun-off firm's share price

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Definitions:

Adjusting Entry

An accounting entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Depreciation

An approach to distributing the expense of a material asset across its period of utility.

Fiscal Year

A fiscal year refers to a 12-month period utilized by businesses and governments for the purposes of financial reporting and budgeting, and it doesn't always align with the calendar year.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset over time.