a.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when an outboard engine manufacturer was taken over by inboard marine engineer manufacturer.
a.
Answer to Problem 1UTI
This is market extension merger because they are increasing the geographical presence of the company.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: It is a merger of companies which deals with similar products and company.
- Product extension merger: It is a merger where the acquiring company is expanding its product offering.
- Market extension merger: It is a merger which increases the market area and coverage.
- Conglomerate merger: Merger of firms in unrelated business.
b.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when drug store chain was taken over by cosmetics manufacturer acquires.
b.
Answer to Problem 1UTI
This is conglomerate merger because both are unrelated businesses merging together.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: Itis the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: Itis the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: Itis a merger of companies which deals with similar products and company.
- Product extension merger: Itis a merger where the acquiring company is expanding its product offering.
- Market extension merger: Itis a merger which increases the market area and coverage.
- Conglomerate merger: Mergerof firms in unrelated business.
c.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when mail order movie rental company was taken over by financial holding company.
c.
Answer to Problem 1UTI
This is product extension merger because company is expanding its product offerings.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: Itis the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: It is a merger of companies which deals with similar products and company.
- Product extension merger: It is a merger where the acquiring company is expanding its product offering.
- Market extension merger: It is a merger which increases the market area and coverage.
- Conglomerate merger: Merger of firms in unrelated business.
d.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when a chip manufacturer was taken over by a computer manufacturer.
d.
Answer to Problem 1UTI
This is backward vertical integration because chips are used for making computers.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: It is a merger of companies which deals with similar products and company.
- Product extension merger: It is a merger where the acquiring company is expanding its product offering.
- Market extension merger: It is a merger which increases the market area and coverage.
- Conglomerate merger: Merger of firms in unrelated business.
e.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when broadcasting company was taken over by Walt Disney Company.
e.
Answer to Problem 1UTI
This is forward vertical integration because they are hiring broadcasting company.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: It is a merger of companies which deals with similar products and company.
- Product extension merger: It is a merger where the acquiring company is expanding its product offering.
- Market extension merger: It is a merger which increases the market area and coverage.
- Conglomerate merger: Merger of firms in unrelated business.
f.
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
Identify: The type of business combination when Colorado electric utility company was taken over by California based electric utility.
f.
Answer to Problem 1UTI
This is horizontal merger because both offer similar products.
Explanation of Solution
The U.S federal trade commission defines six types of mergers
They are as follows:
- Backward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a supply of services or product it provides.
- Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
- Horizontal merger: It is a merger of companies which deals with similar products and company.
- Product extension merger: It is a merger where the acquiring company is expanding its product offering.
- Market extension merger: It is a merger which increases the market area and coverage.
- Conglomerate merger: Mergerof firms in unrelated business.
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Chapter 1 Solutions
Advanced Accounting
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- When a company expands by supplying independent business owners with an established business, including its name and trademark, this is referred to as a business format franchise. O product franchise. manufacturing franchise. franchise business. US DIarrow_forwardAs the manager of a corporation you decided to open a new branch abroad. Which of the following terms fit best for the decision you made? Select one: a.Controller b.Capital budgeting c.Profit maximization d.Partnershiparrow_forwardWhy would it be desirable to switch from an S corporation to C corporation once the business is growing fast?arrow_forward
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