Fact Pattern 31-4 Carrier Company Exchanges Some of Its Shares

question 48

Multiple Choice

Fact Pattern 31-4 Carrier Company exchanges some of its shares for some of the shares of Distribution Corporation. The exchange is used to create Equity Inc., whose business activity is to hold the shares of the two companies.
Refer to Fact Pattern 31-4. Equity Inc. is

• A) a holding company.
• B) a parent corporation.
• C) a subsidiary corporation.
• D) a foreign corporation.

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Definitions:

Value-based Pricing

A pricing approach that sets the cost of a product or service according to its perceived worth to the consumer, rather than the expenses involved in its creation.

Preventive Maintenance

Scheduled maintenance on equipment or systems aimed at preventing unexpected failures or extending their life.

Target Costing

A pricing method that involves identifying the desired profit margin and market price, then working backward to determine the maximum cost that can be incurred on a product.

Return on Investment

An indicator for assessing an investment's effectiveness, determined by dividing the net profit by the investment's total cost.