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 a merger where two or more companies merge to form a new company, and the old companies cease to exist. Thus, option C is the best definition of consolidation among the given choices. Option A refers to a controlling interest, option B refers to a takeover bid, option D refers to a demerger or spinoff, and option E refers to a distribution of shares.

Which of the Following Is the Best Deﬁnition of Consolidation