Which of the following is the best definition of consolidation?
A) An interest controlling 50 percent of outstanding votes plus one; thereby it may decide the fate of the firm.
B) Corporate takeover bid communicated to the shareholders by direct mail.
C) A merger in which a new firm is created and both the acquired and acquiring firm cease to exist.
D) The splitting up of a company into two or more companies.
E) The distribution of shares in a subsidiary to existing parent company shareholders.

Question

Quizplus · Accepted Answer

Consolidation refers to the process of combining two or more companies into a new entity, where both the acquired and acquiring firms cease to exist, and a new firm is formed. This is distinct from a merger where one of the companies survives and absorbs the other.

Which of the Following Is the Best Definition of Consolidation