Code Company combines its assets and liabilities with those of Design Corporation to form Engineer Inc. Code and Design cease to exist. With respect to the assets of Code and Design, Engineer Inc. acquires
A)none.
B)only those acquired after the combination was proposed.
C)an amount equal to the ratio of the firms' pre-merger market values.
D)all.

Question

Quizplus · Accepted Answer

When two companies combine their assets and liabilities to form a new company, the new entity, in this case, Engineer Inc., acquires all the assets and liabilities of the merging companies (Code Company and Design Corporation). This is a characteristic of a merger or consolidation where the assets and liabilities of the combining entities are merged into the new entity.

Code Company Combines Its Assets and Liabilities with Those of Design