Which of the Following Questions Is FALSE

question 32

Multiple Choice

Which of the following questions is FALSE?

• A) Any acquirer shares received in full or partial exchange for target shares triggers an immediate tax liability for target shareholders.
• B) In a friendly takeover, the target board of directors supports the merger, negotiates with potential acquirers, and agrees on a price that is ultimately put to a shareholder vote.
• C) How the acquirer pays for the target affects the taxes of both the target shareholders and the combined firm.
• D) If the acquirer purchases the target assets directly (rather than the target stock), then it can step up the book value of the target's assets to the purchase price.

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Definitions:

Investing Activities

Transactions involving the acquisition or disposal of non-current assets or other investments not included in cash equivalents.

Contributed Capital

The total value of money or assets that shareholders have directly invested in a company.

Sarbanes-Oxley Act

The Sarbanes-Oxley Act is a United States federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.