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.

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Definitions:

Failure to Adhere

A lack of compliance or failure to follow agreed-upon rules, regulations, or conditions.

Seize Property

The act of taking possession of property, often by legal authority, due to legal judgment or law enforcement action.

Attach Funds

A legal process where a creditor seeks court permission to seize the funds of a debtor from a bank account or similar resource to satisfy a debt.

Creditor

A person or entity to whom money is owed by another (the debtor), typically arising from a transaction of credit or loan.