Cardinal Corporation redeems all of its voting common stock.Cardinal then exchanges this redeemed stock with Wren corporation for 40% of Wren's voting common and nonvoting preferred stock.The Wren stock was distributed to the Cardinal shareholders.After the transaction,both Cardinal and Wren corporations still exist.The former Cardinal shareholders are now shareholders of Wren.This transaction qualifies as a(n):

Question

Quizplus · Accepted Answer

This does not qualify as a "Type B" reorganization because Wren used preferred stock as well as voting stock in the exchange.The acquiring corporation can use only voting stock.For the other types of reorganizations,assets of one of the corporations would have to be transferred to the other.

Cardinal Corporation Redeems All of Its Voting Common Stock