Which of the following about an asset purchase merger transaction is (are) correct?
I. Only the assets are purchased.
II. The buying firm receives 100% of the assets and incurs only 50% of the liabilities.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Which of the following about an asset purchase merger transaction is (are) correct? 
I. Only the assets are purchased.
II. The buying firm receives 100% of the assets and incurs only 50% of the liabilities.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

Statement I is correct as in an asset purchase merger transaction, only the assets of the target company are purchased. Statement II is incorrect as the buying firm may receive less than 100% of the assets and may also choose to assume more than 50% of the liabilities.

Which of the Following About an Asset Purchase Merger Transaction