Chapter 29, Problem 2CQ

a

Summary Introduction

To identify:-The following statements are true or false.

Merger:

Merger is the combination of two entities into one in which shareholders of both the companies merge their resources into new company Merger is basically the result of merging the two or more companies into one.

Purchase Accounting Method for Mergers:

In the purchase accounting method the assets of the targeted company has to be recorded into the current market value in the books of acquiring company and goodwill assets account has to be created. Goodwill is the difference of current market value and purchase price.

Synergy:

Synergy is a state in which two or more companies combined then they can perform better than the sum of their individual efforts in terms of productivity, revenue.

Taxable Merger:

Taxable merger is a merger in which one or both the companies have to pay the taxes on the capital gains arise due to merger.

Tax-Free Merger:

Tax-free merger is a merger in which none of the companies has to pay the taxes on the capital gains arise due to merger.

b

Summary Introduction

To identify:-The following statements are true or false.

c

Summary Introduction

To identify:-The following statements are true or false.

d

Summary Introduction

To identify:-The following statements are true or false.

e

Summary Introduction

To identify:-The following statements are true or false.

f

Summary Introduction

To identify:-The following statements are true or false.