Which of the Following Statements Best Describes the Requirement That

question 87

Multiple Choice

Which of the following statements best describes the requirement that must be met in a tax-deferred Type B stock-for-stock reorganization?

• A)The 40 percent continuity of interest test must be met with respect to the stock transferred from the acquisition corporation to the target shareholders.
• B)The acquiring corporation must hold substantially all of the target's properties after the acquisition.
• C)The target corporation shareholders must receive "solely" voting stock in the acquiring corporation in the exchange.
• D)The target corporation shareholders must receive voting stock in the acquiring corporation in exchange for 60 percent or more of the target corporation stock.

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Definitions:

Costs of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and manufacturing overhead.

Inventory

A company's full collection of materials and goods, kept for the goal of being sold or used in production.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for, represented as an asset on the company's balance sheet.

Return on Equity

A financial ratio indicating the profitability of a company relative to shareholders' equity, showing how much profit is generated with the money shareholders have invested.