Nontax Characteristics That Should Be Considered in Choosing an Entity

question 22

Multiple Choice

Nontax characteristics that should be considered in choosing an entity form include which of the following?
I.Number of owners.
II.Limited liability for owners.
III.Ability to participate in management.
IV.Transferability of ownership interests.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Statements II and IV are correct.
• D)Statements I, II, and IV are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Non-controlling Interest

A stake in a company that is less than 50%, implying that the holder does not have control over the company's operations.

Equity

The value of an ownership interest in a company, calculated as company assets minus its liabilities and representing the net assets owned by shareholders.

Acquisition Date

The exact date on which control of a business is obtained by the acquirer, upon which the acquirer applies acquisition accounting.

Non-controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company.