In Order to Reduce the Risk Associated with a New

question 20

Multiple Choice

In order to reduce the risk associated with a new line of business,Conservative Corporation established Spin Company as a wholly owned subsidiary.It transferred assets and accounts payable to Spin in exchange for its common stock.Spin recorded the following entry when the transaction occurred:

-Based on the preceding information,immediately after the transfer,

• A)Conservative's total assets decreased by $23,000.
• B)Conservative's total assets decreased by $20,000.
• C)Conservative's total assets increased by $56,000.
• D)Conservative's total assets remained the same.

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Definitions:

Widespread Costs

Expenses that impact a large sector of the population or numerous aspects of an economy, often relating to public policies or externalities.

Benefits Accrue

The accumulation of advantages or positive results over time from an action or investment.

Purely Competitive

A market structure characterized by many participants offering identical products, where no single buyer or seller can influence the market price.

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, as calculated in economic theory.