Fact Pattern 31-1 Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains.
Refer to Fact Pattern 31-1. Outlook owed money to Quest Bank and other creditors. With respect to these liabilities, in the merger Pinnacle assumes
A) none of Outlook ' s liabilities.
B) only those liabilities incurred after the merger was proposed.
C) an amount of liability equal to the ratio of the firms' pre-merger market values.
D) all of Outlook ' s liabilities.

Question

Quizplus · Accepted Answer

In a merger where one company absorbs another, the surviving company assumes all liabilities and obligations of the absorbed company. Therefore, Pinnacle assumes all of Outlook's liabilities.