Advanced Accounting
Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
Question
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Chapter 1, Problem 1UTI

a.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: It is a merger of companies which deals with similar products and company.
  4. Product extension merger: It is a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: It is a merger which increases the market area and coverage.
  6. Conglomerate merger: Merger of firms in unrelated business.

b.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: Itis the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: Itis a merger of companies which deals with similar products and company.
  4. Product extension merger: Itis a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: Itis a merger which increases the market area and coverage.
  6. Conglomerate merger: Mergerof firms in unrelated business.

c.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: It is a merger of companies which deals with similar products and company.
  4. Product extension merger: It is a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: It is a merger which increases the market area and coverage.
  6. Conglomerate merger: Merger of firms in unrelated business.

d.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: It is a merger of companies which deals with similar products and company.
  4. Product extension merger: It is a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: It is a merger which increases the market area and coverage.
  6. Conglomerate merger: Merger of firms in unrelated business.

e.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: It is a merger of companies which deals with similar products and company.
  4. Product extension merger: It is a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: It is a merger which increases the market area and coverage.
  6. Conglomerate merger: Merger of firms in unrelated business.

f.

To determine

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.

Expert Solution
Check Mark

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:

  1. 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.
  2. Forward vertical integration: It is the deal where a company moves down the production marketing cycle by acquiring a company that uses it products.
  3. Horizontal merger: It is a merger of companies which deals with similar products and company.
  4. Product extension merger: It is a merger where the acquiring company is expanding its product offering.
  5. Market extension merger: It is a merger which increases the market area and coverage.
  6. Conglomerate merger: Mergerof firms in unrelated business.

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Students have asked these similar questions
If A company acquires either a supplier of inputs or a distributor of its products or the company to which it sells its products. It is : Select one: a. Congeneric Acquisition b. Horizontal Acquisition c. Conglomerate Acquisition d. Vertical Acquisition CLEAR MY CHOICE
An expansion consists of: - taking over another business - merging with another business - both.
When you think of a successful company in our country (a bank, airlines or a tourism company), how should the Mergers and Acquisitions be done? Explain the process choosing a company kind
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