In an Acquisition, One Firm Simply Buys Another Firm, Whereas

question 35

True/False

In an acquisition, one firm simply buys another firm, whereas in a merger the consolidation is more collaborative.

---

Definitions:

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, typically through owning a large percentage of its stock.

Cost Method

An accounting method used to value an investment, based on the cost to acquire it plus any additional investments or deducting any reductions.

Impairment Loss

A reduction in the book value of an asset when its market value falls below its carrying amount on the balance sheet.

Straight Line Amortization

An approach to systematically allocate the cost of an intangible asset throughout its period of usefulness.