Acquiring Corporation Transfers $1 Million of Its Voting Common Stock

question 49

Multiple Choice

Acquiring Corporation transfers $1 million of its voting common stock and $100,000 cash to Target Corporation in exchange for 90% of the Target assets. The assets retained by Target are used to settle its liabilities. Target then distributes the Acquiring stock and cash received to its shareholders in exchange for all of their Target shares. Target then liquidates. This restructuring qualifies as a:

• A)"Type A" reorganization.
• B)"Type B" reorganization.
• C)"Type C" reorganization.
• D)"Type D" reorganization.
• E)Taxable exchange.

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Definitions:

Barriers To Entry

Obstacles that make it difficult to enter a particular market, such as high start-up costs, access to technology, or strict regulations.

Dynamic Process

A process characterized by constant change, activity, or progress.

Dollar Votes

The concept in economics that consumers "vote" for products and services they desire through the expenditure of their money.

Homogeneous Product

A product that is identical in quality and specifications no matter its source, making it indistinguishable across producers.