Which of the following examples accurately describes a difference in the types of business combinations?

A) A statutory merger can only be effected through an asset acquisition while a statutory consolidation can only be effected through a capital stock acquisition.

B) A statutory merger can only be effected through a capital stock acquisition while a statutory consolidation can only be effected through an asset acquisition.

C) A statutory merger requires the dissolution of the acquired company while a statutory consolidation requires dissolution of the companies involved in the combination following the transfer of assets or stock to a newly formed entity.

D) A statutory consolidation requires dissolution of the acquired company while a statutory merger does not require dissolution.

E) Both a statutory merger and a statutory consolidation can only be effected through an asset acquisition but only a statutory consolidation requires dissolution of the acquired company.

Answer: C

Learning Objective: 02-03

Topic: Business combination―Differentiate across forms

Difficulty: 3 Hard

Blooms: Remember

AACSB: Reflective Thinking