Atkon Corporation acquired 90% of the stock of Beta Corporation three years ago. Both corporations are located in the United States. Beta has been an energy drink producer, but unfortunately has suffered substantial losses due to government fines and lawsuits. All of its revenues had been from the sales of the energy drinks. Beta has now filed for bankruptcy and is closing the business with no assets remaining for shareholders. Atkon Corporation will recognize

Question

Quizplus · Accepted Answer

Atkon Corporation will recognize an ordinary loss because the investment in Beta Corporation has become worthless due to bankruptcy, and the loss is related to a business investment, not a capital asset.

Atkon Corporation Acquired 90% of the Stock of Beta Corporation