Calvin Transfers Land to a Trust

question 46

Multiple Choice

Calvin transfers land to a trust. Calvin retains the right to the income from the land for the rest of his life. Upon his death, the land is to be transferred to his daughter, Melissa. Calvin's interest is

• A)a remainder interest.
• B)a life estate.
• C)a reversionary interest.
• D)a term certain.

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Definitions:

Acquisition Differential

The difference between the purchase price of a company and the fair value of its net identifiable assets.

Consolidated Income Statement

An income statement combining the revenue, expenses, and net income of a parent company and its subsidiaries, presenting a comprehensive total for the corporate group.

Amortization

The process of gradually writing off the initial cost of an asset over its useful life.

Acquisition Differential

The difference between the purchase price of a company and the fair value of its identifiable assets and liabilities.