Management and Shareholders May Desire to Have Legally Separate Corporations

question 87

Multiple Choice

Management and shareholders may desire to have legally separate corporations because

• A)it may insulate a profitable corporation from an unprofitable corporation's insolvency and creditors.
• B)it may simplify compliance with state tax and regulation requirements.
• C)it may allow a company to enter a new line of business with a minimum of investment and risk.
• D)all of the above
• E)none of the above

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Definitions:

Partnership Assets

All types of resources owned by a partnership that are used in its operations, including cash, property, and equipment.

Noncash Assets

Assets that cannot be easily converted into cash, including tangible assets like machinery and intangible assets like patents.

Personally Insolvent

A financial condition where an individual is unable to meet their debts or liabilities with their available assets or income.

Capital Balance

The amount of money that a business or individual has invested in an asset or enterprise, reflecting the equity or ownership interest.