The Result of Two Firms Combining to Form One Company

question 18

Multiple Choice

The result of two firms combining to form one company is called a:

• A)joint tenancy.
• B)tenancy in common.
• C)merger.
• D)voluntary directorship.

---

Definitions:

Goodwill

An intangible asset that represents the excess of the purchase price over the fair market value of acquired net assets during a business acquisition.

Initial Value Method

An accounting approach where investments are recorded at their purchase cost without adjustment for changes in market value.

Noncontrolling Interest

A share in the equity of a subsidiary not owned by the parent company, also known as minority interest, reflecting ownership that does not have controlling power.

Net Income

The amount of total revenues that exceed total expenses of a company in a given period, often viewed as "profit" or "earnings."