Fact Pattern 31-2 Dynamo Corporation combines its assets and liabilities with those of Energy Company to form Fuel Inc. Dynamo and Energy cease to exist.
Refer to Fact Pattern 31-2. With respect to the liabilities of Dynamo and Energy, Fuel Inc. acquires
A) none of the liabilities.
B) only those liabilities acquired after the combination was proposed.
C) an amount of liability equal to the ratio of the firms' pre-merger market values.
D) all the liabilities of both companies.

Question

Quizplus · Accepted Answer

Fuel Inc. acquires all the liabilities of both Dynamo Corporation and Energy Company because, in a merger, the new entity assumes all assets and liabilities of the merging companies.

Fact Pattern 31-2 Dynamo Corporation Combines Its Assets and Liabilities