Target Sells Assets Not Desired by Acquirer Before Entering into a Reorganization

question 72

Multiple Choice

Target sells assets not desired by Acquirer before entering into a reorganization transaction with Acquirer. In which reorganization will the step transaction doctrine not apply to the sale by Target?

• A) "Type A" reorganization.
• B) "Type B" reorganization.
• C) "Type C" reorganization.
• D) Only "Type A" and "Type C".

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Definitions:

Asset Account

An account on a company's balance sheet that represents a resource with economic value owned or controlled by the business.

Revenue Accounts

Accounts that track the income generated from a company's primary and secondary activities, such as sales revenue, service revenue, and interest income.

Adjusting Entry

An adjusting entry is a journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred, ensuring the accounts reflect true and fair values.

Liability Account

An accounting ledger that shows the debts or obligations of a business, indicating amounts owed to creditors.