Rabbit Corporation and Fox Corporation Would Like to Merge into One

question 46

Multiple Choice

Rabbit Corporation and Fox Corporation would like to merge into one company.Rabbit's only asset is a nontransferable chemical process that has a value of $300,000 and Rabbit has liabilities of $100,000.Fox has the manufacturing plant and experience to produce the products from Rabbit's chemical process.Its manufacturing plant has a value of $900,000 with a mortgage of $200,000.Which type of reorganization would be the most appropriate for Rabbit and Fox?

• A)"Type A" consolidation reorganization.
• B)"Type B" reorganization.
• C)"Type C" reorganization.
• D)Acquisitive "Type D" reorganization.
• E)None of the above is appropriate.

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Definitions:

Efficiency

The optimal production and distribution of resources in a way that maximizes the net benefit to society or an economy.

Total Surplus

A measure of society's overall net advantage resulting from the consumption and production of a good or service, comprised of both consumer and producer surplus.

Fire Marshal

An official responsible for enforcing fire safety codes and regulations, as well as investigating fires to determine their cause.

Total Surplus

In economics, the total net gain to society from trading in a market, equal to the sum of consumer and producer surplus.