Why would an acquiring corporation want an acquisition to be tax-free if it gets only a substituted basis rather than a step-up basis for the acquired assets?
What will be an ideal response?
Although the motivation for the tax-free acquisition comes from the target corporation and the target's shareholders, there are two reasons the acquiring corporation may also desire the acquisition be tax-free. First, if the acquiring corporation has no cash to acquire the assets, it must use stock as consideration for the purchase. Second, the target corporation may have favorable tax attributes that the acquiring corporation would like to use.
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Most long-term liabilities are reported on the balance sheet at their
A) ?net realizable value. B) ?replacement value. C) ?historical cost. D) ?present value.
Which of the following is not an example of independent verification?
a. comparing fixed assets on hand to the accounting records b. performing a bank reconciliation c. comparing the accounts payable subsidiary ledger to the control account d. permitting only authorized users to access the accounting system
Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000 respectively. Income Summary has a credit balance of $30,000. What is Saturn's capital balance after closing Income Summary to Capital?
A) $102,500 B) $120,000 C) $112,500 D) $127,500
Which of the following statements is not true about a 2-for-1 split?
A) Par value per share is reduced to half of what it was before the split. B) Total contributed capital increases. C) The market price will probably decrease. D) A stockholder with ten shares before the split owns twenty shares after the split.