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Which of the following statements is true regarding a statutory consolidation?

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A) The original companies dissolve while remaining as separate divisions of a newly created company.

B) Both companies remain in existence as legal corporations with one corporation now a subsidiary of the acquiring company.

C) The acquired company dissolves as a separate corporation and becomes a division of the acquiring company.

D) The acquiring company acquires the stock of the acquired company as an investment.

E) A statutory consolidation is no longer a legal option.

Answer: A

Learning Objective: 02-03

Topic: Business combination―Differentiate across forms

Difficulty: 2 Medium

Blooms: Remember

AACSB: Reflective Thinking

AICPA: BB Critical Thinking

AICPA: FN Measurement

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