Which of the Following Statements Best Describes the Recognition of Loss

question 118

Multiple Choice

Which of the following statements best describes the recognition of loss on property transferred to shareholders in complete liquidation of a corporation?

• A)The liquidated corporation always recognizes loss on the distribution of property in complete liquidation of the corporation.
• B)The liquidated corporation never recognizes loss on the distribution of property in complete liquidation of the corporation.
• C)The liquidated corporation recognizes loss on the distribution of property in complete liquidation of the corporation if the property is distributed to individuals who are not related parties to the corporation.
• D)The liquidated corporation recognizes loss on the distribution of property in complete liquidation of the corporation only if the property is distributed to individuals who are related parties to the corporation.

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Definitions:

Operating Activities

Transactions related to the primary operations of the business, such as cash received from sales of goods or services.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.

Net Cash

The amount of cash remaining after all operating, investing, and financing activities have been accounted for over a specific period.

Investing Activities

Transactions related to the acquisition or sale of long-term assets and investments.