Mars Corporation Merges into Jupiter Corporation by Exchanging All of Its

question 2

Multiple Choice

Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $2 per share and $100,000 cash. Wanda, the sole shareholder of Mars, surrenders her Mars stock (basis $900,000) and receives all of the Jupiter stock transferred to Mars plus the $100,000. How does Wanda treat this transaction on her tax return?

• A) Wanda recognizes a $100,000 gain. Her Jupiter stock basis is $900,000.
• B) Wanda recognizes a loss of $100,000. Her Jupiter stock basis is $800,000.
• C) Wanda recognizes a $100,000 gain. Her Jupiter stock basis is $700,000.
• D) Wanda realizes a $200,000 loss of which $100,000 is recognized. Her Jupiter stock basis is $1 million.
• E) None of the above.

Identify the impact of cash dividends, property, plant, and equipment transactions, and stock activities on the statement of cash flows.

Determine cash provided by or used in operating activities using given financial information.

Calculate free cash flow from provided data.

Analyze the effect of changes in balance sheet accounts on cash flows from operating activities.

---

Definitions:

Cristae

The folds within the inner membrane of a mitochondrion, which increase the surface area available for biochemical reactions of cellular respiration to occur.

Mitochondria

Organelles found in the cytoplasm of eukaryotic cells that produce energy through cellular respiration.

Data Packets

Small blocks of data transmitted over a network, consisting of control information and user data, enabling efficient and error-checked data transfer.

Networks

Systems consisting of interconnected computers, servers, and other devices that allow for data exchange and sharing of resources.