Question

Moya Corporation adopted a plan of liquidation last year. All but a nominal amount of Moya's assets are distributed to its shareholders within the year. Which of the following statements is not true?

A) The liquidation of Moya Corporation means the corporation has undergone dissolution.B) Moya Corporation retains its state charter.C) Moya Corporation's existence is preserved.D) Moya Corporation has been liquidated for tax purposes.

Answer 1

Answer: A) The liquidation of Moya Corporation means the corporation has undergone dissolution.

Step-by-step explanation:

When a company is liquidated, its assets are sold off and the proceeds are distributed amongst creditors and shareholders like Moya Corporation did. This is usually the result of the company being unable to pay off its debts.

Dissolution on the other hand is when a company is deregistered from the government agency it was registered under and therefore ceases to legally be a recognised entity.

Just because a company is undergoing liquidation does not mean that it has been dissolved because dissolution is usually the final stage. Moya for instance was in existence as it followed its liquidation plan and therefore had not been dissolved yet.