Which of the Following Are Disadvantages of an Asset Purchase

question 21

Multiple Choice

Which of the following are disadvantages of an asset purchase?

• A) Asset write-up
• B) May require consents to assignment of contracts
• C) Potential for double-taxation of buyer
• D) May be subject to sales, use, and transfer taxes
• E) B and D

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Definitions:

Accounts Payable

Financial obligations or debts that a company owes to its suppliers or creditors for goods and services received but not yet paid for.

Owners' Equity

Represents the residual interest in the assets of an entity after deducting liabilities, often referred to as shareholder equity.

Ending Inventory

Represents the final stock of goods available for sale by a firm at the close of an accounting period.

Beginning Inventory

The value of a company’s inventory at the start of an accounting period, carried over from the end of the previous period.