Which one of the following statements correctly applies to a merger? Multiple Choice The acquiring firm does not have to seek approval for the merger from its shareholders. The shareholders of the target firm must approve the merger. The acquiring firm will acquire the assets but not the debt of the target firm. The merged firm will have a new company name. The titles to individual assets of the target firm must be transferred into the acquiring firm's name.
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Which one of the following statements correctly applies to a merger?
-
The acquiring firm does not have to seek approval for the merger from its shareholders.
-
The shareholders of the target firm must approve the merger.
-
The acquiring firm will acquire the assets but not the debt of the target firm.
-
The merged firm will have a new company name.
-
The titles to individual assets of the target firm must be transferred into the acquiring firm's name.
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- Explain how purchase accounting is implementedin a merger. Does the accounting profession nowrequire this method? How is any premium that theacquiring firm paid over the acquired firm’s bookvalue treated subsequent to a merger?Choose the correct. What is a statutory merger?a. A merger approved by the Securities and Exchange Commission.b. An acquisition involving the purchase of both stock and assets.c. A takeover completed within one year of the initial tender offer.d. A business combination in which only one company continues to exist as a legal entity.Which of the following situations best describes a business combination to be accounted for as a statutory merger? Select one: a. Two companies combine to form a new third company, and the original two companies are dissolved. b. One company transfers assets to another company it has created c. Both companies in a combination continue to operate as separate, but related, legal entities. d. Only one of the combining companies survives and the other loses its separate identity
- Which of the following statements is most CORRECT? Oa. The primary rationale for most operating mergers is synergy. Ob. In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms. Oc. Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return. Od. The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis. Oe. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.When one company buys the assets and liabilities of another company, this is known as which of the following?Choose one answer.a. Limited liability company b. Merger c. Conventional corporation d. AcquisitionIn the business combination of Polka and Spot Select one: a. all of the costs except those of registering and issuing the securities are included in the purchase price of Spot. b. the salaries of Polka's employees assigned to the merger are treated as expenses. c. only the accounting and legal fees are included in the purchase price of Spot d. the costs of registering and issuing the securities are included as part of the purchase price for Spot.
- TRUE OR FALSE 1. The merger of two completely unrelated enterprises is referred to as a congeneric merger, however, the merger of somewhat related companies is referred to as a conglomerate merger of somewhat related companies is referred to as conglomerate merger. 2. if there is sufficient proof that the acquisition has been made for a business purpose and the shareholders of the target firm will be compensated with voting shareholders of the target firm will be compensated with voting shares in the acquiring firm, the acquisition will be non-taxable. 3. with cash consideration, the stockholders of the target firm share the gains and losses of acquisition and vice-versa. 4. A merger is the total absorption of one firm by another, however with a consolidation an entirely new firm is created. 5. A white knight is a friendly suitor that a target firm turns to as an alternative to a hostile bidder.What important issues should management consider prior to a merger or acquisition? What are the current GAAP requirements for the type of merger/acquisition?Please refer to the picture below for information. Instructions: Show the complete solution Question: 1. Prepare the Statement of Financial Position (SFP) of Tanangonan after the merger. 2. Determine the goodwill or gain on bargain purchase from the above acquisition.
- What amount of gain or loss does Ernesto recognize if the transaction is structured as a Type A merger?What is a statutory merger?a. A merger approved by the Securities and Exchange Commission.b. An acquisition involving the purchase of both stock and assets.c. A takeover completed within one year of the initial tender offer.d. A business combination in which only one company continues to exist as a legal entity.What is the difference between an operating merger and a financial merger?