Match Each of the Following Items with the Appropriate Description

question 107

Multiple Choice

Match each of the following items with the appropriate description, indicating whether the item's treatment for financial accounting and Federal income tax purposes is the same or not.
-Parent owns 100% of a Brazil corporation and wants the entity to join the consolidated group.

• A)Tax and book treatment is the same
• B)Tax and book treatment differ

---

Definitions:

Leverage

The use of borrowed funds with the aim to increase the potential return of an investment.

Capital Mix

Capital mix refers to the combination of debt and equity financing used by a company to fund its operations and growth.

Retained Earnings

The portion of a company's profits that is retained or kept in the company rather than paid out to shareholders as dividends.

Flotation Cost

Expenses incurred by a company during the issuance of new securities, including underwriting fees and legal costs.