8. Please answer the following question based on Figure 2 below. In the image below we see the Before Split-Up view of a split up, and we see the After Split-Up view of a split up. What happened to the Parent Holding Company? Please select an answer based on the options below. (see Figure 2 on the next page)

1. Parent Holding Company was absorbed into Subsidiary 1.
2. Parent Holding Company was absorbed into Subsidiary 2
3. Parent Holding Company was liquidated as it was only holding the stock of Subsidiary 1 and Subsidiary 2.
4. Parent Holding Company was exchanged for Subsidiary 2.

Answer:________

Reorganizations - Split Up Focus is more on separating businesses for various reasons (management focus, specialization, regulatory restriction (e.g., SEC merger term), need for cash) Before Split-Up After Split-Up 1. Parent Holding Company exchanges S1 shares for PHC shares Parent Holding Company 1 Subsidiary 1 Subsidiary 2 2 2. PHC exchanges S2 shares for PHC shares What happened to Parent Holding Company? Subsidiary 1 Subsidiary 2 27 Reorganizations - Split Up Focus is more on separating businesses for various reasons (management focus, specialization, regulatory restriction (e.g., SEC merger term), need for cash) Before Split-Up After Split-Up 1. Parent Holding Company exchanges S1 shares for PHC shares Parent Holding Company 1 Subsidiary 1 Subsidiary 2 2 2. PHC exchanges S2 shares for PHC shares What happened to Parent Holding Company? Subsidiary 1 Subsidiary 2 27