Isabella and Marta Form Pine Corporation

question 70

True/False

Isabella and Marta form Pine Corporation. Isabella transfers land (basis of $40,000 and fair market value of $180,000) for 50 shares plus $20,000 cash, while Marta transfers $160,000 cash for the other 50 shares in Pine Corporation. Pine Corporation has a basis of $40,000 in the land it receives from Isabella.

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Definitions:

Consolidated Revenue

The total revenue recognized from the combined operations of a parent company and its subsidiaries, after inter-company transactions have been eliminated.

Revenue Test

A criterion used to determine whether a business segment or component qualifies as a reportable segment based on its revenue amount, either internally or externally generated.

Segment Revenues

Revenues generated from different business units or geographical areas within a company.

Segment Expenses

Costs that are directly associated with specific divisions or operational segments of a company.