A Horizontal Merger Is the Acquisition of a fiRm

question 22

Multiple Choice

A horizontal merger is the acquisition of a firm:

• A) With the same level of net income as the acquirer.
• B) That provides a product or service as an input to the acquirer.
• C) That competes in the same industry as the acquiring firm.
• D) To which the acquirer is NOT related.
• E) That spreads out the geographic area served by the acquirer.

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Definitions:

Acquisition Method

An accounting approach used for consolidating the financial statements of a group where one entity has control over the others.

Noncontrolling Interest

An ownership interest in a subsidiary that is not large enough to control the company's operations, often represented as a separate component of equity in the consolidated financial statements.

Acquisition-Date Fair Value

The market value of an asset or liability at the exact date an acquisition is completed, used for accounting purposes.

Noncontrolling Interest

The portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company.