A Divestiture That Results in an Operating Unit Becoming an Independent

question 61

Multiple Choice

A divestiture that results in an operating unit becoming an independent company is a

• A) sale of a line of business.
• B) sale of a unit to existing management.
• C) spin-off of an operating unit.
• D) leveraged buyout.

---

Definitions:

Straight-Line Depreciation

A technique for distributing the expense of a tangible asset uniformly throughout its operational lifespan.

After-Tax Discount

The reduction in price or value of an item, investment, or income after taxes have been deducted.

Income Taxes

Taxes levied by the government on individuals or corporations' net income or profit.

Straight-Line Depreciation

A method of allocating the cost of a fixed asset evenly over its useful life.