A Consolidation

question 41

Multiple Choice

A consolidation:

• A) has precisely the same result as a merger.
• B) is the most typical form of business combination used today.
• C) is always illegal (in contrast to mergers,which are legal under state law).
• D) requires the assent of the board of directors and shareholders of each corporation.

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Definitions:

Liquidation Transactions

Transactions that occur when a company is in the process of closing and its assets are being sold off.

Capital Distributions

Capital distributions are payments made by a corporation to its shareholders from its capital base, as opposed to payments made from earnings or profit.

Liquidation Expenses

Costs associated with disbanding a company or partnership, including selling off assets, paying off creditors, and distributing any remaining assets to shareholders or partners.

Deficit Capital Account

A situation where a company's capital account balance is negative, indicating that liabilities exceed assets.