In a True Merger,not a Consolidation,the Acquirer

question 28

Multiple Choice

In a true merger,not a consolidation,the acquirer

• A)and the target firm become a new firm with a new name.
• B)accepts the responsibility for the debts of the target firm.
• C)ceases to exist as a separate firm.
• D)obtains only the assets of the target firm.
• E)is totally absorbed by the acquired firm.

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by investments in other companies, reflecting the profit in proportion to shares held.

Comprehensive Income

The total change in equity for a reporting period other than transactions from owners, encompassing all realized and unrealized gains and losses.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and adjustments are made only for dividends received and permanent declines in value.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment in the business or to pay down debt.