Question 1

Burst-o'-Flavor Burger Restaurant Corporation merges with Chick-E Chicken Franchise Corporation, with Burst-o'-Flavor absorbing Chick-E Chicken. After the merger​

Accepted Answer

In a merger, one company absorbs the other. In this case, Burst-o'-Flavor is absorbing Chick-E Chicken, which means that after the merger, Burst-o'-Flavor will be the surviving corporation. Therefore, the best choice is C.

Question 2

Lee files a suit against Memphis Studios Inc. While the suit is pending, Memphis Studios consolidates with Nashville Music Corporation to form Opry Productions, Inc. Now, liability in the suit, if any, rests with​

Accepted Answer

When two companies consolidate, they become one entity and the liabilities of the previous companies are transferred to the new entity. Therefore, liability in the suit would rest with Opry Productions, Inc.

Question 3

Ground-Up Construction Corporation has a right of action against Heav-Equip, Inc. Ground-Up Construction merges with Investors Development, Inc., with Investors absorbing Ground-Up. After the merger, Ground-Up's right of action against Heav-Equip can be exercised by​

Accepted Answer

After the merger, Investors Development, Inc. absorbs Ground-Up Construction Corporation, and as a result, Investors now owns Ground-Up's assets, including the right of action against Heav-Equip, Inc. Therefore, Investors has the right to exercise the claim against Heav-Equip, Inc.

Question 4

Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally exercise appraisal rights if Quantum participated in​

Accepted Answer

Appraisal rights are typically available to shareholders in the event of major corporate changes like mergers or consolidations, allowing them to demand the company buy back their shares at a fair value.

Question 5

Through a certain transaction, Coffee Bean Cafés, Inc., acquires all of the shares of Deli Dining Corporation for some of Coffee Bean's shares. Both Coffee Bean and Deli Dining continue to exist. This is​

Accepted Answer

The answer of Through a certain transaction, Coffee Bean Cafés,...

Question 6

Fact Pattern 41-2​
Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist.
-Refer to Fact Pattern 41-2. The formation of Unified Resources is​

Accepted Answer

A consolidation occurs when two or more companies combine to form a new entity, and the original companies cease to exist, as is the case with Shale Oil Corporation and Tierra Frakking Company forming Unified Resources, Inc.

Question 7

Omni Trax Inc. owns 95 percent of the shares of Pinpoint App Inc. Through a certain transaction, Omni combines with Pinpoint, but only Omni continues to exist. This is​

Accepted Answer

In a short-form merger, one company that owns at least 90% of the shares of another company merges with and absorbs the other company, with no vote of the shareholders of the acquired company required. This is also known as a parent-subsidiary merger, since the two companies have a parent-subsidiary relationship.

Question 8

Fact Pattern 41-2​
Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist.
-Refer to Fact Pattern 41-2. Unified Resources acquires​

Accepted Answer

When Shale Oil Corporation and Tierra Frakking Company combine their assets and debts to form Unified Resources, the new company acquires all of the assets and debts of both predecessor companies. Therefore, answer choice A is correct.

Question 9

Garden Supply Company and Home & Lawn Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with​

Accepted Answer

The articles of consolidation are typically filed with the state's secretary of state, who oversees the incorporation of businesses and maintains corporate records.

Question 10

B-Sharp Corporation and Coding Company wish to combine all assets, stock, and personnel into a new firm to be called DigiSongs Inc. This is​

Accepted Answer

A consolidation occurs when two or more companies combine to form a completely new entity, as described in the scenario where B-Sharp Corporation and Coding Company are forming DigiSongs Inc.

Question 11

Broncobuster BarBQ Company and Cowpuncher Cuisine, Inc. decide to combine. Deanna, a Cowpuncher shareholder, is dissatisfied with the price that she will receive for her stock. In the absence of fraud or other illegal conduct, Deanna's exclusive remedy is to​

Accepted Answer

Deanna's exclusive remedy in this situation is to exercise an appraisal right. Appraisal rights allows shareholders to have their shares appraised and receive fair value for them if they dissent from certain corporate actions, such as a merger or consolidation. This is the most common remedy for dissatisfied shareholders in situations like this. Filing a suit to delay the process or refusing to agree to the deal are not viable options because the majority of shareholders may already have approved the merger. Acquiring stock from other shareholders may not be a feasible option for Deanna depending on the availability and price of the shares.

Question 12

Scuba Adventures Inc. and Tours of the Sea Company decide to consolidate. This corporate combination does not require the approval of​

Accepted Answer

The officers of a company typically do not have the authority to approve a consolidation; such decisions are usually made by the directors and shareholders.

Question 13

Fact Pattern 41-3​
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc.
-Refer to Fact Pattern 41-3. Evergrip had rights in certain property. After the consolidation, Fit-Rite acquires the rights​

Accepted Answer

In a consolidation, the surviving entity (Fit-Rite Bolts & Screws Inc. in this case) acquires all of the assets and liabilities of the company being consolidated (Evergrip Studs, Inc.). Therefore, Fit-Rite would automatically acquire the rights to the property that Evergrip had prior to the consolidation.

Question 14

Fact Pattern 41-2​
Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist.
-Refer to Fact Pattern 41-2. Unified Resources assumes​

Accepted Answer

When Shale Oil Corporation and Tierra Frakking Company combine to form Unified Resources, Inc., the new company assumes all of their assets and debts. Therefore, Unified Resources assumes all of Shale's and Tierra's debts.

Question 15

Ilene is a shareholder of Jazz Street Studios, Inc. Ilene could normally exercise appraisal rights if Jazz Street participated in​

Accepted Answer

Appraisal rights typically allow shareholders to demand a fair value for their shares in the event of major changes like mergers or share exchanges, which can significantly alter the nature of their investment.

Question 16

Beth is a shareholder of Cotton Clothes, Inc., whose management is considering extending its operations through some type of combination or acquisition with Denim Jeans Corporation. Beth could normally exercise appraisal rights if Cotton participates in​

Accepted Answer

Appraisal rights typically allow shareholders to demand a fair value for their shares if they disagree with certain major corporate actions, such as a sale of substantially all of the corporate assets.

Question 17

Like other corporations, Cable Media Inc. can extend its operations through​

Accepted Answer

Buying the assets of, or a controlling interest in, another corporation is a common way for corporations to extend their operations and expand their business. It is a strategic move that can provide new revenue streams, increase market share, and gain access to new technologies or resources. Liquidating and distributing assets, filing articles of dissolution or appointing a receiver are options for ending or winding up a corporation, not extending its operations.

Question 18

Fact Pattern 41-3​
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc.
-Refer to Fact Pattern 41-3. The articles of consolidation differ from Fit-Rite's articles of incorporation. The articles​

Accepted Answer

In a consolidation, the articles of consolidation govern the new company. Therefore, the articles of consolidation would replace both companies' articles of incorporation.

Question 19

Fact Pattern 41-3​
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc.
-Refer to Fact Pattern 41-3. Evergrip owed money to Guaranty Bank and other creditors. After the consolidation, Fit-Rite must pay​

Accepted Answer

After a consolidation, the new entity (Fit-Rite Bolts & Screws Inc.) assumes all liabilities and debts of the consolidating companies, including Evergrip's debts.

Question 20

A merger between Blended Beverage Corporation and Cowland Creamery Inc. can be expressed as Blended Beverage + Cowland Creamery =​

Accepted Answer

The answer of A merger between Blended Beverage Corporation and...

Quiz 41: Mergers and Takeovers

Burst-o'-Flavor Burger Restaurant Corporation merges with Chick-E Chicken Franchise Corporation, with Burst-o'-Flavor absorbing Chick-E Chicken. After the merger

Lee files a suit against Memphis Studios Inc. While the suit is pending, Memphis Studios consolidates with Nashville Music Corporation to form Opry Productions, Inc. Now, liability in the suit, if any, rests with

Ground-Up Construction Corporation has a right of action against Heav-Equip, Inc. Ground-Up Construction merges with Investors Development, Inc., with Investors absorbing Ground-Up. After the merger, Ground-Up's right of action against Heav-Equip can be exercised by

Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally exercise appraisal rights if Quantum participated in

Through a certain transaction, Coffee Bean Cafés, Inc., acquires all of the shares of Deli Dining Corporation for some of Coffee Bean's shares. Both Coffee Bean and Deli Dining continue to exist. This is

Fact Pattern 41-2 Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist. -Refer to Fact Pattern 41-2. The formation of Unified Resources is

Omni Trax Inc. owns 95 percent of the shares of Pinpoint App Inc. Through a certain transaction, Omni combines with Pinpoint, but only Omni continues to exist. This is

Fact Pattern 41-2 Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist. -Refer to Fact Pattern 41-2. Unified Resources acquires

Garden Supply Company and Home & Lawn Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with

B-Sharp Corporation and Coding Company wish to combine all assets, stock, and personnel into a new firm to be called DigiSongs Inc. This is

Broncobuster BarBQ Company and Cowpuncher Cuisine, Inc. decide to combine. Deanna, a Cowpuncher shareholder, is dissatisfied with the price that she will receive for her stock. In the absence of fraud or other illegal conduct, Deanna's exclusive remedy is to

Scuba Adventures Inc. and Tours of the Sea Company decide to consolidate. This corporate combination does not require the approval of

Fact Pattern 41-3 DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc. -Refer to Fact Pattern 41-3. Evergrip had rights in certain property. After the consolidation, Fit-Rite acquires the rights

Fact Pattern 41-2 Shale Oil Corporation combines its assets and debts with those of Tierra Frakking Company to form Unified Resources, Inc. Shale and Tierra cease to exist. -Refer to Fact Pattern 41-2. Unified Resources assumes

Ilene is a shareholder of Jazz Street Studios, Inc. Ilene could normally exercise appraisal rights if Jazz Street participated in

Beth is a shareholder of Cotton Clothes, Inc., whose management is considering extending its operations through some type of combination or acquisition with Denim Jeans Corporation. Beth could normally exercise appraisal rights if Cotton participates in

Like other corporations, Cable Media Inc. can extend its operations through

Fact Pattern 41-3 DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc. -Refer to Fact Pattern 41-3. The articles of consolidation differ from Fit-Rite's articles of incorporation. The articles

Fact Pattern 41-3 DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc. -Refer to Fact Pattern 41-3. Evergrip owed money to Guaranty Bank and other creditors. After the consolidation, Fit-Rite must pay

A merger between Blended Beverage Corporation and Cowland Creamery Inc. can be expressed as Blended Beverage + Cowland Creamery =