Parent Corporation Owns 70% of Sam Corporation's Single Class of Stock

question 21

Multiple Choice

Parent Corporation owns 70% of Sam Corporation's single class of stock. This year, Parent Corporation purchases for cash the remaining 30% of Sam Corporation's stock from four individual investors pursuant to a tender offer. A plan of liquidation is approved by Sam Corporation's shareholders during the last month of this year, and Sam Corporation's assets are distributed by year-end to Parent Corporation in exchange for all of Sam's outstanding stock. Parent Corporation should

• A)not recognize any gains and losses on the redemption.
• B)recognize gains and losses on the redemption.
• C)recognize gains but not losses on the redemption.
• D)recognize losses but not gains on the redemption.

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Definitions:

Taking Control

The act of assuming command or management over a situation, often to direct outcomes or influence behavior.

Follow-up Message

A communication sent to inquire or remind about a previous message or action.

Thank-you Note

A written expression of gratitude, typically sent to acknowledge a gift, service, or favor.

Organizational Model

A conceptual framework that outlines the structure, processes, and methods an organization uses to achieve its objectives efficiently.