Which One of the Following Statements Is Correct

question 32

Multiple Choice

Which one of the following statements is correct?

• A)The shareholders of an acquired firm are generally given a choice of accepting either cash or shares of stock when the acquisition is tax-free.
• B)To be a tax-free acquisition, the shareholders of an acquired firm must receive shares in the acquiring firm that are equal to 95 percent or less of the value of the shares held in the acquired firm.
• C)The assets of an acquired firm are recorded on the books of the acquiring firm at their current book value regardless of the tax status of the acquisition.
• D)Target firm shareholders demand a higher selling price when an acquisition is a non-taxable event.
• E)If the assets of a firm are written up as part of the acquisition process, the increase in value is considered to be a taxable gain.

---

Definitions:

Ciliary Body

A part of the eye that includes the ciliary muscle, which controls the shape of the lens for focusing, and the ciliary epithelium, which produces the aqueous humor.

Optic Nerve

The nerve that transmits visual information from the retina to the brain.

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light images into nerve signals sent to the brain.

Conjunctiva

The thin, transparent membrane that covers the white part of the eyeball and the inner surfaces of the eyelids.