Which of the Following Statements Is Not a Reason a Company

question 42

Multiple Choice

Which of the following statements is not a reason a company may purchase another company's stock?

• A) earning a return on excess cash
• B) sustain the other company's stock price
• C) gaining control of another company's operations
• D) developing or maintaining business relationships

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Definitions:

Book Value

Represents the net value of a company's assets as recorded on the balance sheet, calculated as assets minus liabilities.

Fair Value

The market-based measurement of the value of an asset or liability based on current transactions between willing parties, outside of a forced liquidation or distress sale.

Acquisition Method

An accounting technique used in consolidations that involves recording the assets and liabilities of a company being acquired at their fair value at the date of acquisition.

Consolidated Balance Sheet

A financial statement that aggregates the total assets, liabilities, and equity of a parent company and its subsidiaries.