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:

Litigation

The process of taking legal action in court to resolve disputes between parties.

Quick Ratio

A liquidity ratio that measures a company's ability to meet short-term obligations with its most liquid assets, calculated as (Cash + Marketable Securities + Receivables) / Current Liabilities.

Current Assets

Resources anticipated to be transformed into cash, disposed of, or used up within the span of one year or throughout the duration of the operating cycle, depending on which of the two periods extends further.

Current Liabilities

Financial obligations or debts a company is due to pay within a year.