Fact Pattern 31-2 Dynamo Corporation Combines Its Assets and Liabilities

question 66

Multiple Choice

Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist.
Refer to Fact Pattern 31-2. The formation of Fuel Inc. is

• A) a takeover.
• B) a consolidation.
• C) a liquidation.
• D) a share exchange.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to pursue a particular action.

Accounting Costs

Costs that appear on the financial statements of a company.

Economic Decisions

Choices made by individuals, firms, or governments regarding the allocation of resources to optimize benefits.

Sunk Cost

A cost that has already been incurred and cannot be recovered. It should not impact future business decisions because it cannot be changed.