Acquiring Corporation Transfers $1 Million of Its Voting Common Stock

question 49

Multiple Choice

Acquiring Corporation transfers $1 million of its voting common stock and $100,000 cash to Target Corporation in exchange for 90% of the Target assets. The assets retained by Target are used to settle its liabilities. Target then distributes the Acquiring stock and cash received to its shareholders in exchange for all of their Target shares. Target then liquidates. This restructuring qualifies as a:

• A)"Type A" reorganization.
• B)"Type B" reorganization.
• C)"Type C" reorganization.
• D)"Type D" reorganization.
• E)Taxable exchange.

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Definitions:

Trial And Error

A problem-solving method that involves attempting different solutions and eliminating those that do not work.

Morphemes

The smallest units of meaning in a language.

Grammar

In a language, a system of rules that enables us to communicate with and understand others. Semantics is the language’s set of rules for deriving meaning from sounds, and syntax is its set of rules for combining words into grammatically sensible sentences.

Linguistic Determinism

Whorf’s hypothesis that language determines the way we think.