Which of the Following Statements Is FALSE

question 56

Multiple Choice

Which of the following statements is FALSE?

• A)The method of payment (cash or stock)affects how the value of the target's assets is recorded for tax purposes and it affects the combined firm's financial statements for financial reporting.
• B)The combined firm must mark up the value assigned to the target's assets on the financial statements by allocating the purchase price to target assets according to their fair market value.
• C)Any goodwill created in a merger deal can be amortized for tax purposes over 15 years.
• D)Many transactions are carried out as acquisitive reorganizations under the tax code.These structures allow the target shareholders to defer their tax liability on the part of the payment made in acquirer stock but they do not allow the acquirer to step up the book value of the target assets.

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Definitions:

Dependent Variable

A variable in statistical modeling, experiments, or observations that is expected to change as a result of manipulations in the independent variable(s).

Independent Variables

Variables that are manipulated or categorically varied by researchers in an experiment to determine their effect on dependent variables.

Multicollinearity

Refers to a situation in statistics where independent variables in a regression model are highly correlated, potentially leading to difficulties in estimating the relationship between each independent variable and the dependent variable.

Independent Variables

Variables in an equation or model that are assumed to influence or cause changes in dependent variables.