A Spin-Off Is an Action in Which

question 79

Multiple Choice

A spin-off is an action in which:

• A)the management bids for and acquires the firm.
• B)one firm issues stock to acquire another firm.
• C)successful product lines are sold to competitors.
• D)a portion of the firm's assets are sold off to form a new company.

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Definitions:

Straight-Line

A technique for computing an asset's depreciation by distributing its cost evenly across each year of its expected useful life.

Double-Declining-Balance Method

An accelerated depreciation method that doubles the book value of an asset to calculate annual depreciation expense.

Residual Value

The approximated value of an asset at the conclusion of its period of utility.

Depreciation

Systematically dividing the cost of a tangible asset across the years it is expected to last.