Which of the Following Is an Assumption Behind a Wholly-Owned

question 11

Multiple Choice

Which of the following is an assumption behind a wholly-owned subsidiary?

• A)The company can afford the costs involved in setting up a wholly-owned subsidiary.
• B)The company is willing to commit to the market in the long term.
• C)The local government allows foreign companies to set up wholly-owned subsidiaries.
• D)All of the above are assumptions behind a wholly-owned subsidiary.

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Definitions:

Modified Accelerated Cost Recovery System (MACRS)

A method of depreciation applied in the United States that allows for faster write-offs of assets to encourage investment.

Class Life

The expected useful lifetime of a fixed asset, which determines the depreciation rate for tax and accounting purposes.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

After-Tax Cash Flow

After-tax cash flow is the net cash flow generated from business activities after accounting for taxes, indicating the actual cash a company has on hand after tax obligations.