S1: A stock acquisition occurs when one corporation pays cash, issue stock, or issues debt for all or part of the voting stock and of another company; and the acquired company dissolves and ceases to exist as a separate legal entity. S2: In an asset acquisition, the books of the acquired company are closed out and its assets and liabilities are transferred to the books of the acquirer. A. Both statements are correct. B. Only S2 is correct. C. Only S1 is correct. D. Both statements are incorrect.

S1: A stock acquisition occurs when one corporation pays cash, issue stock, or issues debt for all or part of the voting stock and of another company; and the acquired company dissolves and ceases to exist as a separate legal entity. S2: In an asset acquisition, the books of the acquired company are closed out and its assets and liabilities are transferred to the books of the acquirer. A. Both statements are correct. B. Only S2 is correct. C. Only S1 is correct. D. Both statements are incorrect.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 11DQ

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Statement 1: A stock acquisition occurs when one corporation pays cash, issue stock, or issues debt for all or part of the voting stock and of another company; and the acquired company dissolves and ceases to exist as a separate legal entity. Statement 2: In an asset acquisition, the books of the acquired company are closed out and its assets and liabilities are transferred to the books of the acquirer. Statement 3: Unrealized profits from transactions between a home office and its branch are added from Beginning inventory and deducted from ending inventory of the branch in preparing combined financial statements for the enterprise. Statement 4: The balance of the Allowance for Overvaluation of Inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office. Statement 5: Only agency sales and operating expenses determines the sales agency’s profitability. Statement 6: The primary advantages of the system…
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