Identifying assets to be transferred to the subsidiary

Assignment Help Financial Management
Reference no: EM131444325

ABC Software Company sells software and hardware for computers. The federal government brings an antitrust action against ABC seeking divestiture of ABC's hardware division. As a result of a court ordered divestiture, ABC and the federal government agree to a plan of divestiture that requires ABC to organize a subsidiary to receive the divested assets and to distribute the stock of the subsidiary to its shareholders. During 2016, ABC pays $400,000 to various independent contractors for the following services: identifying assets to be transferred to the subsidiary, organizing the subsidiary, structuring the transfer of assets to the subsidiary to qualify as a tax-free transaction to ABC, and distributing the stock of the subsidiary to the stockholders. How should ABC treat the $400,000 in costs? Explain with references to primary sources.

Reference no: EM131444325

Questions Cloud

What is the current equivalent lump sum of your settlement : After an injury, you win a lawsuit judgment of $3160 per month starting next month for a total of 47 months. If the interest rate is 2.5% APR compounded monthly, what is the current equivalent lump sum of your settlement?
Low weighted average cost of capital : Why is it important for a business to have a low Weighted Average cost of capital (WACC)? How is the business affected negatively with a higher WACC? And how can a business lower it's WACC?
Find a web article related to time value of money : Find a web article related to time value of money Post a link to the article and respond to the article, discussing why you find it especially interesting Also, and critically, how would you improve the analysis?
An optometrist sells custom-ordered eyeglasses : An optometrist sells custom-ordered eyeglasses. Assume the optometrist maintains no stock of lenses or frames (except for some sample frames to show customers), but custom orders everything from a manufacturer.
Identifying assets to be transferred to the subsidiary : ABC Software Company sells software and hardware for computers. The federal government brings an antitrust action against ABC seeking divestiture of ABC's hardware division. identifying assets to be transferred to the subsidiary, organizing the subsi..
What is the present value of the annuity : A 10-year annuity pays $1,400 per month, and payments are made at the end of each month. If the interest rate is 12 percent compounded monthly for the first five years, and 8 percent compounded monthly thereafter, what is the present value of the ann..
Calculate the future value of that mortgage : Suppose that you take a mortgage for 20 years, paying $1800 at the end of each month at a rate of 6% APR. Calculate the future value of that mortgage.
Explain how inflation works in a cash in advance model : Explain how inflation (via transfers) works in a cash in advance model Explain how inflation affects consumption in a cash in advance model (with transfers). What causes this to happen.
Positive correlation-positive interest rate and future value : The rationale being that we could reinvest the cash today so that the earlier we reinvest the cash the more would be our future value, indicating that there is a positive correlation between a positive interest rate and the future value. Explain and ..

Reviews

Write a Review

Financial Management Questions & Answers

  Correct about the early exercise of american options

Which of the following statements is correct about the early exercise of American options?

  Organisations behaviour is guided by financial data in the

organisations behaviour is guided by financial data. in the short term such data will help determine operational

  Fin 571 tre-bien bakeries generated net income of 233412

tre-bien bakeries generated net income of 233412 this year. at year end the company had accounts receivables of 47199

  The firm needs to plow back its earnings to fuel growth

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $12 per share dividend 10 years from today ..

  Prepare the journal entry to record the acquisition of land

Fielder Company obtained land by issuing 2,970 shares of its $10 par value common stock. The land was recently appraised at $123,140. The common stock is actively traded at $40 per share. Prepare the journal entry to record the acquisition of the lan..

  Calculate the net investment for the new line

Delivery and installation of the new line are expected to cost an additional $100,000. Assuming Fleming's marginal tax rate is 40 percent, calculate the net investment for the new line.

  Retirement increases the benefits of compound interest

Starting to invest late for retirement increases the benefits of compound interest. If the returns of two firms are negatively correlated, then one of them must have a negative beta. If inflation is expected to be relatively high, then interest rates..

  What is the stock price for each company

Red, Inc., Yellow, Corp., and Blue Company each will pay a dividend of $2.65 next year. The growth rate in dividends for all three companies is 5%. The required return for each company's stock is 8%, 11% and 14% respectively.  What is the stock price..

  An investment offers a total return

An investment offers a total return of 12 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 8.8 percent. What does Bill believe the inflation rate will be over the next year?

  You are to select one business thatdoes not alreadyhave a

you are to select one business thatdoes not alreadyhave a websiteand develop an internet strategy for it. most large

  Estimate her taxable income-tax liability and tax refund

Mary Parker is 24 years of age, single, lives in an apartment, and has no dependents. Last year she earned $68, 700 sales assistant for Tl in Dallas. $5, 250 of her wages were withheld for Federal Incomes taxes. In addition, she had interest income f..

  What was your dollar return and percent return

Sprint Nextel Corp stock ended the previous year at $34.16 per share. It paid a $2.82 per share dividend last year. It ended last year at $29.69. If you owned 700 shares of Sprint, what was your dollar return and percent return?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd