The Following Are Dubious Reasons for Mergers

question 60

Multiple Choice

The following are dubious reasons for mergers:

• A)diversification.
• B)increased earnings per share (EPS) and industry consolidation.
• C)lower financing costs and industry consolidation.
• D)diversification, increased earnings per share (EPS), and lower financing costs.

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Definitions:

Extraordinary Loss

Unusual and infrequent losses that are not part of the ordinary activities of a business, such as losses from natural disasters.

Goodwill Impairment

A charge that occurs when the fair value of goodwill falls below its carrying value on the balance sheet, indicating that the asset is not generating the expected profits.

Condensed Income Statement

A simplified financial statement showing the gross revenue, expenses, and net income of a company, omitting detailed accounts.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.