Cassius Ltd and Brutus Ltd agreed to merge by forming another company,Casca Ltd,which acquired all the issued capital of the two companies in a share exchange.Cassius Ltd was a much larger company than Brutus Ltd,with several large equity stakeholders,so that the board of Cassius Ltd emerged from the business combination with the power to dominate the operating and financial policies of the merged entity.Based on these facts:
A) Casca Ltd must be the acquiring entity because it acquired the issued capital of Cassius Ltd and Brutus Ltd.
B) Cassius Ltd is the acquiring entity because its management emerges as the dominant power in the merged entity.
C) neither Cassius Ltd nor Brutus Ltd can be the acquiring entity because their equity securities have been acquired by Casca Ltd.
D) none of the above.

Question

Quizplus · Accepted Answer

Cassius Ltd is the acquiring entity because it emerged from the merger with the power to dominate the operating and financial policies of the merged entity. Casca Ltd is simply the new entity formed as a result of the merger, but it is not necessarily the acquiring entity.

Cassius Ltd and Brutus Ltd Agreed to Merge by Forming