Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Outlook owed money to Quest Bank and other creditors. With respect to these debts, in the merger Pinnacle assumes
A)none.
B)only those incurred after the merger was proposed.
C)an amount equal to the ratio of the firms' pre-merger market values.
D)all.

Question

Quizplus · Accepted Answer

In a merger, when one company (in this case, Pinnacle Inc.) absorbs another (Outlook Inc.), the surviving entity (Pinnacle Inc.) typically assumes all debts and liabilities of the company being absorbed. This includes debts to all creditors, such as Quest Bank, regardless of when those debts were incurred.