Which of the Following Is the Best Definition of a Merger

question 314

Multiple Choice

Which of the following is the best definition of a merger?

• A) The complete absorption of one company by another, where the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity.
• B) Going-private transactions in which a large percentage of the money used to buy the stock is borrowed. Often, incumbent management is involved.
• C) Typically an agreement between firms to create a separate, co-owned entity established to pursue a joint goal.
• D) A targeted stock repurchase where payments are made to potential bidders to eliminate unfriendly takeover at-tempts.
• E) All publicly owned stock in a firm is replaced with complete equity ownership by a private group.

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Definitions:

Capital Maintenance

Capital Maintenance is an accounting concept aimed at preserving the original capital of the company, usually measured in financial or physical terms.

Net Income

The amount of profit a company has earned during a specific period, calculated as revenue minus expenses, taxes, and costs.

Additional Investment

Funds injected into a business by its owners or shareholders over and above the initial investment, typically to support operations, expansion, or growth.

Revenue Recognition

An accounting principle that outlines the specific conditions under which revenue is recognized and dictates how it should be reported in the accounts.