Identify Which of the Following Statements Is False

question 20

Multiple Choice

Identify which of the following statements is false.

• A)A Sec. 338 election usually triggers taxation to the target corporation.
• B)A Sec. 338 election must be made not later than the fifteenth day of the ninth month following the first stock acquisition in a series of acquisitions that leads to 80% or more stock ownership.
• C)When a Sec. 338 election is made, the target corporation is treated as having sold all of its assets at their FMV at the close of the acquisition date.
• D)In a Sec. 338 deemed sale election, the shareholders of the target corporation sell their stock to the acquiring corporation.

Differentiate between reasons for acquiring less than a 100% interest in a subsidiary.

Understand and apply the elimination entries for intercompany transactions.

Calculate non-controlling interest (NCI) on the consolidated statement of financial position.

Understand differences between the entity method and parent-company extension method in consolidations.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a particular period, indicating the efficiency of inventory management.

Days' Sales

A financial metric estimating the number of days required to convert a company's inventory into sales, also known as inventory turnover period.

Cost Of Goods Sold

The expenses directly associated with manufacturing products that a company sells.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.