Which One of the Following Statements Is Correct

question 22

Multiple Choice

Which one of the following statements is correct?

• A)If an acquisition is made with cash then the cost of that acquisition is dependent upon the
• Acquisition gains.
• B)Acquisitions made by exchanging shares of equity are normally taxable transactions.
• C)The management of an acquiring firm may put itself at risk of losing control of the firm if
• They make acquisitions using shares of equity.
• D)The equityholders of the acquiring firm will be better off when an acquisition results in
• Losses if the acquisition was made with cash rather than with equity.
• E)Acquisitions based on legitimate business purposes are not taxable transactions
• Regardless of the means of financing used.

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Definitions:

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.