In a stock acquisition, a buyer acquires a target company’s stock directly from the selling shareholders. With a stock sale, the buyer is assuming ownership of both assets and liabilities – including potential liabilities from past actions of the business.
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When a Target Corporation is involved in a taxable stock acquisition?
If target corporation is involved in a taxable stock acquisition by purchaser corporation, each shareholder will be taxed on a capital gain (loss) equal to the difference between the amount received for the stock and his or her stock basis. B.
Why do we review the content of the Target Corporation?
We review their content and use your feedback to keep the quality high. If target corporation is involved in a taxable … View the full answer
What happens when a corporation sells its stock?
In a stock sale, the buyer assumes the current depreciation schedule of assets and the existing tax status of the corporation. Loans to the owner and personal liabilities are normally removed.
What happens to the target after the closing of the acquisition?
After the closing of the stock acquisition, the target will continue as it existed prior to the acquisition with respect to its ownership of assets and liabilities. What factors are taken into consideration?
When one corporation buys all the shares of another corporation What is the effect as a general rule?
When a corporation acquires all or substantially all of the assets (as opposed to stock) of another corporation by direct purchase, the purchasing (or acquiring) corporation simply extends its ownership and control over the additional assets. (iv) the sale is fraudulently executed in an effort to avoid liability.
Which of the following is a correct statement regarding corporate transfer of rights powers and privileges in a merger?
Which of the following is a correct statement regarding corporate transfer of rights, powers, and privileges in a merger? Multiple choice question. All states allow corporations to transfer their rights, powers, and privileges in a merger.
When a consolidation occurs What happens to the original corporations?
Statutory Consolidation: When businesses are combined into a new entity, the original companies cease to exist. By combining them together, they create a new, larger corporation. As such, statutory consolidation is normally done through a merger.
Which of the following may be issued to shareholders as proof of ownership in the corporation?
A share certificate is a written document signed on behalf of a corporation that serves as legal proof of ownership of the number of shares indicated. A share certificate is also referred to as a stock certificate.
Which of the following is not a right of the shareholders of a corporation?
The answer is b. The stockholders, themselves, do not have the right to declare dividends to be paid to the...
What is an Acquisition agreement?
Acquisition agreement means the agreement, including a sales agreement, between the seller and purchaser outlining the terms and conditions of the acquisition. Acquisition agreements also include any other agreements, such as options and subsidiary agreements relating to terms of the transaction.
When a consolidation occurs What happens to the original corporations quizlet?
In a consolidation, two or more corporations combine in such a way that each corporation ceases to exist, and a new one emerges. After a consolidation, the new corporation acquires all of the assets and liabilities of the corporations that were consolidated.
What is merger and consolidation?
During a merger, essentially other corporate entities become a part of an existing entity. This can be useful for smaller companies merging into larger companies that have greater brand recognition and market traction. Conversely, a consolidation is when multiple companies join to form a new entity.
What is a consolidation vs merger?
Business mergers involve two or more companies combining through a takeover and the emergence of one surviving company. On the other hand, business consolidation happens when two or more companies combine to create a new single company.
What type of corporation may be owned by just a few people and does not offer its shares for sale to the general public?
A private corporation may be owned by just a few people and does not offer its shares for sale to the general public. The "S" corporation is a private, state-chartered corporation that was developed to help small businesses by taxing them as individuals in a partnership.
When a corporation distributes assets of the company to its investors it is referred to as a n?
When a corporation distributes assets of the company to its investors, it is referred to as a(n) dividend.
Which of the following is a corporation that issues stock that can be freely bought and sold?
A corporation that issues stock that can be freely bought and sold is called a public company.