Pacific Surfware Acquired Surferdude and as Part of the Transaction

question 115

Multiple Choice

Pacific Surfware acquired Surferdude and as part of the transaction both of the firms ceased to exist in their form prior to the transaction and combined to create an entirely new entity, Wildly Exotic Surfware. Which one of the following terms best describes this transaction?

• A) Divestiture
• B) Tender offer
• C) Joint venture
• D) Spinoff
• E) Consolidation

---

Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by the business, such as rent, salaries, and insurance premiums.

Break-even Point

The point at which total income matches total outgoings, leading to neither a profit nor a loss.

Sales Dollars

This term represents the total revenue generated from the sales of goods or services, expressed in currency units.

Cost Structure

The relative proportion of fixed, variable, and mixed costs in an organization.