Font size
WorksheetsPRE 4_BSMA 3_QUIZ 1
Total questions: 20
Worksheet time: 16mins
A business combination occurs when one company acquires another or when two or more companies merge into one. After the combination, each company gains control over each other.
False
True
The company that gains control over the other is referred to as
Parent/Acquirer
Subsidiary/Acquiree
Parent/Acquiree
Subsidiary/Acquirer
The company that is controlled is referred to as
Parent/Acquirer
Subsidiary/Acquiree
Parent/Acquiree
Subsidiary/Acquirer
Occurs when two or more companies merge into a single entity which shall be one of the combining companies.
(a)
Occurs when two or more companies consolidate into a single entity which shall be the consolidated company.
(a)
Control is normally presumed to exist when the acquirer holds at least how much interest in the acquirer's voting rights? (No need to put %)
(a)
Acquirer purchases the assets and assumes liabilities of the acquiree in exchange for cash or other non-cash consideration.
Stock Acquisition
Asset Acquisition
Acquirer obtains control over the acquiree by acquiring a majority ownership interest in the voting rights of the acquiree.
Asset Acquisition
Stock Acquisition
There is a control if the acquirer has the power to appoint and remove the majority of the board of directors of the acquiree.
True
False
There is a control if the acquirer controls the acquirer's non-operating and financial policies because of a law or agreement.
False
True
There is no control if the acquirer has no power over more than half of the voting rights of the acquiree because of an agreement with the investors.
False
True
ABC Co. acquires 50% ownership interest in XYZ Co.'s ordinary shares.
Is there a control?
Yes
No
ABC Co. acquires 50% ownership interest in XYZ Co.'s ordinary shares.
Is there no control?
Yes
No
ABC Co. acquires 51% ownership interest in XYZ Co. There is an agreement with the shareholders of XYZ that ABC will not control the appointment of the majority of the board of directors of XYZ.
Is there a control?
Yes
No
ABC Co. acquires 35% ownership interest in XYZ Co. There is an agreement with the shareholders of XYZ that ABC will control the appointment of the majority of the board of directors of XYZ.
Is there a control?
Yes
No
ABC Co. acquires 40% ownership interest in XYZ Inc. ABC has an agreement with EFG Co. and HIJ Co, which owns 10% of XYZ, whereby both companies will always vote in the same way as ABC.
Does ABC have controlling interest over XYZ?
No
Yes
ABC Co. acquires 40% ownership interest in XYZ Inc. ABC has an agreement with EFG Co. and HIJ Co, which owns 10% each of XYZ, whereby both companies will always vote in the same way as ABC.
Does ABC have controlling interest over XYZ?
No
Yes
LMN Corporation acquires 30% of NOP Co.'s ordinary shares but has special voting rights that give it significant influence over key decisions.
Does LMN Corporation have control over NOP Co.?
Yes
No
MNO Inc. acquires 50% of PQR Ltd., but PQR Ltd. retains full operational control through a long-term management agreement.
Does MNO Inc. truly have control over PQR Ltd.?
No
Yes
ABC Holdings, a subsidiary of ABC Company, acquires 70% of the equity in XYZ Ltd. Does ABC Company have indirect control over XYZ Ltd. through its subsidiary?
Yes
No
