ACCOUNTING-Identify the proper classification for the following transactions:

ACCOUNTING-Identify the proper classification for the following transactions:

ACCOUNTING-Identify the proper classification for the following transactions:

Identify the proper classification for the
following transactions:
A-‘“A” Reorganization
B- “B” Reorganization
C- “C” Reorganization
F- Forward Triangular Merger
R- Reverse Triangular Merger
T- Taxable Acquisition

Alpha Corp is a widget manufacturing corporation
that has only one class of stock and each share counts for one vote. It has
2000 shares outstanding worth $2,000,000. Alpha Corp’s only asset is inventory
worth $1,000,000 and $1,000,000 of cash.
Beta Corp is also a widget corporation that has
only one class of stock and each share counts for one vote. It has 1000 shares
outstanding worth $1,000,000. Beta Corp’s only asset is inventory worth
$1,000,000.
Situation 1: Alpha Corp shareholders transfer 900 shares
of Alpha Corp stock in exchange for 900 shares of Beta Corp. After the
transaction, Beta Corp continues as a subsidiary of Alpha Corp.
Situation 2: Alpha Corp shareholders transfer 900 shares
of Alpha Corp stock in exchange for 900 shares of Beta Corp. After the
transaction, Beta Corp distributes all its inventory to Alpha Corp in a
complete liquidation.
Situation 3: Alpha Corp shareholders transfer 700 shares
of Alpha Corp stock in exchange for 700 shares of Beta Corp. After the
transaction, Beta Corp continues as a subsidiary of Alpha Corp.
Situation 4: Alpha Corp shareholders transfer 750 shares
of Alpha Corp stock and $150,000 in exchange for $900,000 worth of Beta Corp’s
inventory. After the transaction Beta Corp distributes the $100,000 remaining
inventory to its shareholders in a complete liquidation.
Situation 5: Alpha Corp shareholders transfer 750 shares
of Alpha Corp stock and $150,000 in exchange for $900,000 worth of Beta Corp’s
inventory. After the transaction Beta Corp continues to operate a smaller
business with the remaining $100,000 of inventory.

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Situation 6: Beta Corp merges into Alpha Corp under state
law. Beta shareholders receive $800,000 in cash and $200,000 in notes. Beta
Corp transfers all its inventory to Alpha Corp and Beta Corp liquidates
completely.
Situation 7: Beta Corp merges into Alpha Corp under state
law. Beta shareholders receive 500 Alpha shares and $500,000 cash. Beta Corp
transfers all its inventory to Alpha Corp and Beta Corp liquidates completely.
Situation 8: Alpha Corp forms a newly formed corporation,
Charlie Corp. Charlie Corp merges into Beta Corp under state law. Beta Corp
shareholders receive 700 Alpha shares and $300,000 cash. After the merger, Beta
Corp continues as a subsidiary of Alpha Corp.
Situation 9: Alpha Corp forms a newly formed corporation,
Charlie Corp. Beta Corp merges into Alpha Corp under state law. Beta Corp
shareholders receive 700 Charlie shares and $300,000 cash. After the merger,
Charlie Corp continues as a subsidiary of Alpha Corp and holds all of Beta
Corp’s inventory.
Situation 10: Alpha Corp forms a newly formed corporation,
Charlie Corp. Beta Corp merges into Alpha Corp under state law. Beta Corp
shareholders receive 700 Alpha shares and $300,000 cash. After the merger,
Charlie Corp continues as a subsidiary of Alpha Corp and holds all of Beta
Corp’s inventory

 

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