The Determination of Whether a Shareholder's Gain Qualifies for Stock

question 42

True/False

The determination of whether a shareholder's gain qualifies for stock redemption treatment in a corporate reorganization is based on the reduction in the percentage of the stock held in the target corporation when compared to the percentage held in the acquiring corporation.

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Definitions:

Variable Overhead Rate Variance

The variance between the actual variable overhead costs that were incurred and the anticipated variable overhead calculated according to the real amount of activity.

Supplies Cost

The expense incurred to acquire supplies necessary for the production of goods or the operation of a business.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead costs incurred and the expected variable overhead costs based on standard cost accounting practices.

Direct Labor-hours

The whole amount of production time by workers intimately involved in manufacturing.