Identify Which of the Following Statements Is True

question 60

Multiple Choice

Identify which of the following statements is true.

• A)The Sec. 332 nonrecognition rules apply to the parent corporation when a subsidiary corporation transfers property to the parent corporation in payment of the subsidiary's debt obligation.
• B)A subsidiary corporation is prevented from recognizing gain or loss when transferring property to its parent corporation in satisfaction of an indebtedness it owes to the parent corporation as part of its complete liquidation.
• C)Nonrecognition of gain or loss rules apply to a subsidiary corporation when, pursuant to its complete liquidation, the subsidiary transfers property to a third-party creditor.
• D)All of the above are false.

---

Definitions:

Standard Hours Per Unit

The predetermined amount of time expected to be required to produce one unit of a product under standard operating conditions.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Labor Time Variance

The difference between the actual time taken to complete a task and the standard time expected, multiplied by the labor rate.

Factory Overhead Volume Variance

The difference between the budgeted and actual volume of production, affecting the allocation of fixed manufacturing overhead costs to products.