Consider the following two statements: (i) In a consolidation of ﬁrms A and B, ﬁrm A's shareholders are given shares of ﬁrm B and vice
Versa.
(ii) In a consolidation of ﬁrms A and B, both ﬁrms merge their assets.
A)(i) is correct, (ii) is incorrect.
B)(ii) is correct, (i) is incorrect.
C)Both (i) and (ii) are correct.
D)Both (i) and (ii) are incorrect.
E)A consolidation is the same as a merger.

Question

Quizplus · Accepted Answer

Statement (i) describes a stock swap, which is a common type of acquisition where the shareholders of the target company (B) are given shares of the acquiring company (A), and vice versa. This is not a consolidation or merger where the assets of both companies are combined. 
Statement (ii) describes a consolidation or merger where both A and B merge their assets to create a new entity. This is different from a stock swap where one company acquires the other. Hence, statement (ii) is correct and statement (i) is incorrect. 
Therefore, option (B) is the correct answer. 
Option (E) is also incorrect as a consolidation is not the same as a merger. While both terms refer to the combining of companies, a merger involves two or more companies joining together to form a new entity, while a consolidation involves the combining of assets and liabilities of two or more companies into a new entity.

Consider the Following Two Statements: (I) in a Consolidation of ﬁRms