Spinoffs Generally Occur Because the Company No Longer Wants to Be

question 113

True/False

Spinoffs generally occur because the company no longer wants to be in the business of the unit they are spinning off.

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Definitions:

Equity Method

A technique where an investor reflects its share of an associate's or joint venture's profits or losses in its own financial statements, affecting the carrying value of the investment.

Income Recognition

The process of reporting income when it is earned and realized or realizable, according to accounting principles.

Intra-entity Sales

Transactions occurring between two divisions or subsidiaries within the same parent company, often reflecting internal transfers of goods and services.

Equity Income

Income earned by an investor from an investment in stocks, representing dividends and other distributions from equity investments.