A brokerage cash account allows you to borrow cash to buy securities

The Tom Smith Corporation has the following items

Cash, $5,000; Machinery, $50,000; Building, $150,000; Note payable bank, $10,000; Savings, $10,000; Long-term debt, $50,000; Accounts payable, $30,000; Taxes payable, $5,000; Accounts receivable, $30,000; Inventory, $10,000; Depreciation Building, $35,000; Depreciation Machinery, $25,000; Land $50,000. Total liabilities for this Corporation are A) $45,000. B) $55,000. C) $95,000. D) $155,000. E) $190,000.

Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

A) A spin-off increases the transaction costs associated with selling the subsidiary. B) Shareholders must immediately pay capital gains taxes versus ordinary income taxes on the value of the spin-off. C) A spin-off guarantees a lower cost of capital. D) The spin-off is not taxed as a cash distribution.