PRE 4_BSMA 3_QUIZ 1

A business combination occurs when one company acquires another or when two or more companies merge into one. After the combination, each company gains control over each other.

• False

• True

The company that gains control over the other is referred to as

• Parent/Acquirer

• Subsidiary/Acquiree

• Parent/Acquiree

• Subsidiary/Acquirer

The company that is controlled is referred to as

• Parent/Acquirer

• Subsidiary/Acquiree

• Parent/Acquiree

• Subsidiary/Acquirer

Occurs when two or more companies merge into a single entity which shall be one of the combining companies.

Occurs when two or more companies consolidate into a single entity which shall be the consolidated company.

Control is normally presumed to exist when the acquirer holds at least how much interest in the acquirer's voting rights? (No need to put %)

Acquirer purchases the assets and assumes liabilities of the acquiree in exchange for cash or other non-cash consideration.

• Stock Acquisition

• Asset Acquisition

Acquirer obtains control over the acquiree by acquiring a majority ownership interest in the voting rights of the acquiree.

• Asset Acquisition

• Stock Acquisition

There is a control if the acquirer has the power to appoint and remove the majority of the board of directors of the acquiree.

• True

• False

There is a control if the acquirer controls the acquirer's non-operating and financial policies because of a law or agreement.

• False

• True