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.

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Definitions:

Semiannually

Occurring or done twice a year, typically every six months.

Face Value

The nominal or dollar value printed on a security or a financial instrument representing its value as stated by the issuer.

Interest Expense

The financial charge for the use of borrowed funds that an entity experiences over time.

Current Year

Refers to the present calendar year or fiscal year in which transactions and events are being recorded or reported.