Use the following information to answer the question(s) below.
Polka Corporation exchanges 100,000 shares of newly issued $1 par value common stock with a fair market value of $20 per share for all of the outstanding $5 par value common stock of Spot Inc. and Spot is then dissolved. Polka paid the following costs and expenses related to the business combination:

-When considering an acquisition, which of the following is NOT a method by which one company may gain control of another company?
A) Purchase of the majority of outstanding voting stock of the acquired company.
B) Purchase of all assets and liabilities of another company.
C) Purchase all the outstanding voting stock of the acquired company.
D) All of the above methods result in a company gaining control over another company.

Question

Use the following information to answer the question(s) below.
Polka Corporation exchanges 100,000 shares of newly issued $1 par value common stock with a fair market value of $20 per share for all of the outstanding $5 par value common stock of Spot Inc. and Spot is then dissolved. Polka paid the following costs and expenses related to the business combination:
 
-When considering an acquisition, which of the following is NOT a method by which one company may gain control of another company?
A) Purchase of the majority of outstanding voting stock of the acquired company. 
B) Purchase of all assets and liabilities of another company. 
C) Purchase all the outstanding voting stock of the acquired company. 
D) All of the above methods result in a company gaining control over another company.

Quizplus · Accepted Answer

All the methods listed (A, B, and C) are ways in which a company can gain control over another company. Therefore, option D is incorrect as it states that all methods result in gaining control, which is true.

Use the Following Information to Answer the Question(s) Below