Axle Corporation Acquires 100% of Drexel Corporation's Stock from Drexel's

question 94

Multiple Choice

Axle Corporation acquires 100% of Drexel Corporation's stock from Drexel's shareholders for $500,000 cash. Drexel Corporation has assets with a $600,000 adjusted basis and an $800,000 FMV. The assets are subject to $200,000 in liabilities. Drexel Corporation shareholders purchased their stock eight years ago for $300,000. Axle Corporation's basis in the Drexel Corporation stock is

• A)$800,000.
• B)$600,000.
• C)$500,000.
• D)$300,000.

Realize the importance of competition, consumer choice, and freedom in pricing for the effective operation of markets.

Assess the impact of external events on market prices and the allocation of scarce resources.

Understand the relationship between supply shift and its impact on market dynamics.

Grasp the concept of market equilibrium and its significance in economic efficiency.

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Definitions:

Duty of Performance

An obligation of a party in a contract to fulfill the terms and conditions as agreed within the contract.

Reasonable Skill

A term used to describe the level of competence that a professional or practitioner is expected to display in their field, often used in legal contexts to establish standards for professional services.

Fiduciary

A person who holds a position of trust, required to act for the benefit of another party with respect to specific duties.

Equal Dignity Rule

A legal principle requiring that agents conducting transactions on behalf of principals must have the authority to do so, which is granted with the same formality as the underlying transaction.