Roby Corporation, a Tennessee Corporation, Decides to Change Its State

question 6

Multiple Choice

Roby Corporation, a Tennessee corporation, decides to change its state of incorporation to Delaware to take advantage of its more favorable state corporation laws. Roby Corporation can take advantage of the Type F reorganization rules by

• A)exchanging the Tennessee corporation's assets for the Delaware corporation's stock and liquidating the Tennessee corporation.
• B)liquidating the Tennessee corporation and reincorporating in Delaware.
• C)merging the Tennessee corporation stock into an existing Delaware corporation.
• D)recapitalizing the Tennessee corporation.

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Definitions:

Equity Method

An accounting technique used to record investments in associate companies, reflecting the investor's share of the earnings.

Common Stock

Represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Net Income

The conclusive earnings of a firm after removing all financial outlays and tax obligations from its aggregate revenue.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, incorporating the income on the investor's income statement.