The Complete Absorption of One Company by Another,wherein the Acquiring

question 35

Multiple Choice

The complete absorption of one company by another,wherein the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity,is called a:

• A)merger.
• B)consolidation.
• C)tender offer.
• D)spinoff.
• E)divestiture.

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Definitions:

Merchandise Cost

Merchandise cost is the total expense incurred to purchase goods for resale, including the purchase price, shipping, handling, and import duties.

Gross Profit Method

A technique to estimate the amount of ending inventory and cost of goods sold by using the gross profit margin.

Gross Margin Ratio

A financial metric showing the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company in managing its production costs.

Ending Inventory

The entire value of commodities prepared for sales at the finale of an accounting timeline.