Which of the Following Events Is an Intercompany Transaction

question 29

Multiple Choice

Which of the following events is an intercompany transaction?

• A)a capital contribution
• B)accrual of interest on a loan made by one group member to another group member; both group members use the accrual method of accounting
• C)dividend payment received from a subsidiary corporation to its parent corporation; the subsidiary corporation is not an includible corporation
• D)a parent corporation's sale of stock of a subsidiary corporation to a nonmember of the group

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Definitions:

Variable Cost

Costs that change in proportion to changes in the level of production or sales volume.

Cost Volume Profit (CVP) Analysis

A financial analysis tool used to determine how changes in costs and volume affect a company's operating income and net income.

Simplified Model

An abstracted representation of a system that captures essential features while ignoring less relevant details to facilitate analysis and decision-making.

Activity-Based Costing

A pricing approach that discerns various tasks within a business and allocates the expenses of each activity to all goods and services based on their real usage.