Which of the Following Is an Advantage to a Private

question 22

Multiple Choice

Which of the following is an advantage to a private equity buyout?

• A)They are subject to the controversial regulations included in the 2002 Sarbanes-Oxley Act.
• B)The CEOs frequently have more time and flexibility to enact changes need to turn around subpar companies.
• C)both A and B.
• D)neither A nor B.

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Definitions:

Straight-Line Depreciation

An accounting method that allocates the cost of an asset evenly over its useful life.

Voting Stock

Shares in a company that give the shareholder the right to vote on company matters, such as electing the board of directors.

Fair Value Option

An election that allows companies to report specific financial assets and liabilities at their fair values, with changes in fair value recognized in the income statement.

Acquisition Method

A set of procedures used in accounting to consolidate the financial statements of two companies in the event of a merger or acquisition.