The Difference Between a Merger and an Acquisition Is

question 105

Multiple Choice

The difference between a merger and an acquisition is:

• A)A merger does not combine the assets and liabilities of firms,whereas an acquisition combines assets and liabilities.
• B)A merger combines the assets of the two firms,but each company continues to assume its own liabilities,whereas an acquisition is a total buyout of one firm by another.
• C)A merger is the joining of resources of two companies,whereas an acquisition is a buyout of one firm by the other.The new company concerns itself with merging of resources.
• D)A merger is always something smaller tagging onto something larger,like a merging lane onto an interstate,whereas an acquisition is two firms that are relatively the same size agreeing to continue as one - more like two major interstates that come together and travel as one for several miles.

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Definitions:

Joint Costs

Costs that are incurred to produce two or more products at the same time and cannot be easily attributed to a specific product.

Value Basis

The underlying valuation method used to determine the cost or value of assets, often in the context of taxation, accounting, or investment.

Service Department

A segment of a company that provides support functions to the company's primary activities, such as maintenance or IT services.

Joint Cost

A cost that is incurred in the production of multiple goods or services where the cost cannot be attributed to individual products easily.