Which of the Following Statements Seems Most Correct About a Firm

question 3

Multiple Choice

Which of the following statements seems most correct about a firm that has made a cash tender offer for two million shares of ABC Corp.at a price of $20, which is $6 higher than ABC's current value?

• A)The economic gain of the merger exceeds $40 million.
• B)The economic gain of the merger exceeds $28 million.
• C)The economic gain of the merger exceeds $12 million.
• D)The economic gain of the merger would be zero after accounting for merger cost.

---

Definitions:

Perpetual Inventory System

A financial recording method where sales or purchases of inventory are immediately captured through the use of computerized point-of-sale systems and software for managing enterprise assets.

Gross Method

An accounting practice where purchase discounts are ignored unless taken, with full invoice amounts recorded in the accounts payable.

Invoice Price

The price of goods as listed on the invoice, typically before any discounts, taxes, or additional charges.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.