An Acquisition Occurs When One Firm Takes a Controlling Interest

question 105

True/False

An acquisition occurs when one firm takes a controlling interest in another firm, a legal subsidiary of another firm, or selected assets of another firm. The acquired firm often remains a subsidiary of the acquiring company.

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Definitions:

Corporate Tax Rate

The corporate tax rate is the percentage of a corporation's income that is seized by the government as tax.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Notes Payable

A written promise to pay a certain amount of money, usually including interest, by a specified date or on demand.

Net Purchases

The total amount of purchases after subtracting returns, allowances, and discounts.