Asked by Harpreet Kaur Dhillon on Jul 30, 2024
Verified
Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Outlook owed money to Quest Bank and other creditors. With respect to these debts, in the merger Pinnacle assumes
A) none.
B) only those incurred after the merger was proposed.
C) an amount equal to the ratio of the firms' pre-merger market values.
D) all.
Assumes
Taking something for granted or accepting it as true without verification.
Debts
Amounts of money owed by one party to another, typically as a result of borrowing funds or purchasing goods and services on credit.
- Understand the financial consequences for creditors during mergers, including the assumption of liabilities.
Verified Answer
ZK
Zybrea KnightAug 02, 2024
Final Answer :
D
Explanation :
In a merger, when one company (in this case, Pinnacle Inc.) absorbs another (Outlook Inc.), the surviving entity (Pinnacle Inc.) typically assumes all debts and liabilities of the company being absorbed. This includes debts to all creditors, such as Quest Bank, regardless of when those debts were incurred.
Learning Objectives
- Understand the financial consequences for creditors during mergers, including the assumption of liabilities.
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