On April 1 of the current year, AJI's board of directors adopts a plan of liquidation....

 

Transcribed Image Text:

On April 1 of the current year, AJI's board of directors adopts a plan of liquidation. The corporation determines that it will distribute all existing assets, listed below, pro rata to the shareholders in proportion to their interests in the corporation. Asset Gym Equipment Client List Accounts Receivable Real Property Accounts Payable Cash FMV $500,000 $30,000 $100,000 $1,500,000 $100,000 A/B $0 $0 $0 Debt $1,700,000 ($1,750,000) ($250,000) Hours after board's decision, GloboGymAmeriCorp, Inc. (Globo) approaches Peter, offering to purchase his stock for $200,000. What difference to Peter and Globo if either AJI liquidates and Peter sells his interest in the distributed assets to Globo, or Peter sells his stock in AJI to Globo and Globo completes the liquidation of AJI? Is Globo behaving rationally? On April 1 of the current year, AJI's board of directors adopts a plan of liquidation. The corporation determines that it will distribute all existing assets, listed below, pro rata to the shareholders in proportion to their interests in the corporation. Asset Gym Equipment Client List Accounts Receivable Real Property Accounts Payable Cash FMV $500,000 $30,000 $100,000 $1,500,000 $100,000 A/B $0 $0 $0 Debt $1,700,000 ($1,750,000) ($250,000) Hours after board's decision, GloboGymAmeriCorp, Inc. (Globo) approaches Peter, offering to purchase his stock for $200,000. What difference to Peter and Globo if either AJI liquidates and Peter sells his interest in the distributed assets to Globo, or Peter sells his stock in AJI to Globo and Globo completes the liquidation of AJI? Is Globo behaving rationally?

Answer rating: 100% (QA)

a If AJI liquidates and Peter sells his interest in the distributed assets to Globo then Peter ... View the full answer