Farm Inc Combines Its Assets and Liabilities with Those of Grain

question 29

Multiple Choice

Farm Inc. combines its assets and liabilities with those of Grain Company to form Harvest Corporation. Farm and Grain cease to exist. With respect to the liabilities of Farm and Grain, Harvest acquires

• A)none.
• B)only those acquired after the combination was proposed.
• C)an amount equal to the ratio of the firms' pre-merger market values.
• D)all.

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Definitions:

Opportunity Cost

The cost of an alternative that must be forgone to pursue a certain action, representing the benefits you could have received by taking an alternative action.

Tax Specialist

A professional expert in tax law, regulations, and planning to optimize taxation outcomes for individuals or businesses.

Tax Return

A document filed with state or federal taxing authorities that reports income, expenses, and other pertinent tax information to calculate tax liability.

Short Run

A period in which at least one input, such as plant size, is fixed and cannot be changed by the firm.