Question 1

Refer to Fact Pattern 40-2A. Royal Oil acquires
A) all of Petro's and Quality's assets.
B) half of Petro's and Quality's assets.
C) none of Petro's and Quality's assets.
D) only assets that Petro and Quality acquired after a combina?tion was proposed.

Accepted Answer

The fact pattern states that Royal Oil "successfully acquires all of Petro's and Quality's assets." Therefore, choice A is the correct answer.

Question 2

Realty Credit Company and Second Mortgage Corporation plan to con?solidate. Most likely, the articles of consolidation will be filed with
A) the county recording office.
B) the Securities and Exchange Commission.
C) the state's secretary of state.
D) the U.S. Department of Justice.

Accepted Answer

The state's secretary of state is typically responsible for overseeing corporate filings and consolidations within a state. The county recording office is not the appropriate location for corporate consolidations, the Securities and Exchange Commission (SEC) is responsible for overseeing the regulation of securities and may require certain filings related to the consolidation, but is not the primary location for the articles of consolidation. The U.S. Department of Justice may become involved if there are antitrust concerns with the consolidation, but is not responsible for the initial filings.

Question 3

Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger
A) a different, new corporation is the surviving corporation.
B) Eagle Financial and First Bank are both surviving corporations.
C) Eagle Financial is the surviving corporation.
D) First Bank is the surviving corporation.

Accepted Answer

Eagle Financial is the surviving corporation and has absorbed First Bank. This means that First Bank no longer exists as an independent entity and its assets and liabilities have been taken over by Eagle Financial.

Question 4

Candy Corporation has a right of action against Dina. Candy merges with Eats, Inc., with Eats absorbing Candy. After the merger, Candy's right of action against Dina can be exercised by
A) Candy.
B) Dina.
C) Eats.
D) no one.

Accepted Answer

After the merger, Candy's right of action against Dina becomes the property of Eats, Inc., the surviving corporation. Thus, Eats can exercise the right of action against Dina.

Question 5

Office Company and Kappa Company wish to combine all assets, stock, and personnel into a new firm to be called OK Corporation. This is
A) a consolidation.
B) a merger.
C) an exchange of assets.
D) a takeover.

Accepted Answer

A consolidation occurs when two or more companies combine to form a completely new entity, as is the case with Office Company and Kappa Company forming OK Corporation.

Question 6

Fact Pattern 40-1A 
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
-Refer to Fact Pattern 40-1A. The terms of the merger agreement differ from Dutch Elm's articles of incor?poration. The articles
A) are deemed amended to include the differences.
B) are replaced by the merger agreement.
C) effectively prevent the merger.
D) prevail.

Accepted Answer

In a merger, the articles of incorporation of the surviving corporation are deemed amended to reflect the terms of the merger agreement.

Question 7

A merger between Frosted Confections, Inc., and Great Brewing Company can be expressed as Frosted Confections + Great Brewing =
A) Frosted Confections.
B) Hot Coffee Corporation.
C) Hot Coffee Corporation + Iced Pastries Corporation.
D) Iced Pastries Corporation.

Accepted Answer

The answer of A merger between Frosted Confections, Inc., and...

Question 8

Vacation Destination, Inc., and Wonder Resort Corporation plan to merge. Most likely, the ar?ticles of merger will be filed with
A) the county recording office.
B) the Securities and Exchange Commission.
C) the state's secretary of state.
D) the U.S. Department of Justice.

Accepted Answer

The articles of merger are typically filed with the state's secretary of state where the two companies are incorporated. This is because the state has the authority to approve or reject the merger and ensure that it complies with state laws and regulations.

Question 9

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with
A) Jen.
B) Kopper Kettle.
C) Luminous.
D) no one.

Accepted Answer

When Kopper Kettle merges with Luminous Pans, Inc. and becomes absorbed by Luminous, Luminous assumes Kopper Kettle's liabilities, including any pending lawsuits. Therefore, liability in the suit rests with Luminous, not Kopper Kettle or Jen.

Question 10

Fact Pattern 40-1B 
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation .
-Refer to Fact Pattern 40-1B. The terms of the consolidation agreement dif?fer from Shrimp Boat's articles of incor?poration. The articles
A) are replaced by Trawlers' articles of incorporation.
B) are replaced by the consolidation agreement.
C) effectively prevent the consolidation.
D) prevail.

Accepted Answer

The consolidation agreement typically replaces the original articles of incorporation of the consolidating companies, as it outlines the new terms and structure for the newly formed entity.

Question 11

Fact Pattern 40-1A 
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
-Refer to Fact Pattern 40-1A. Cherry Grove held rights in certain real property. After the merger, Dutch Elm acquires the rights
A) automatically.
B) only after completing certain additional statutory procedures.
C) only Cherry Grove's former shareholders expressly approve.
D) only if the acquisition is a specified result of the merger.

Accepted Answer

In a merger, the surviving corporation automatically acquires all the rights, properties, and liabilities of the merged corporation by operation of law.

Question 12

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Through a certain transaction, Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This is
A) a consolidation.
B) a share exchange.
C) a short-form merger.
D) a termination.

Accepted Answer

This is a short-form merger because Mall Stores already owned 95 percent of the shares of Niche Retail, and only Mall Stores continues to exist after the transaction is complete.

Question 13

Fact Pattern 40-1B 
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation .
-Refer to Fact Pattern 40-1B. Trawlers had rights in certain property. Af?ter the consolidation, UFC acquires the rights
A) automatically.
B) only after completing certain additional statutory procedures.
C) only if Trawlers' former shareholders expressly approve.
D) only if the acquisition is a specified result of the consolidation.

Accepted Answer

When two companies consolidate, all of the assets and liabilities of the companies being consolidated are automatically transferred to the new entity. Therefore, when Shrimp Boat Company consolidated with Trawlers, Inc. to form Unique Fishers Corporation, all of Trawlers' property rights were automatically transferred to UFC.

Question 14

Fact Pattern 40-1B 
Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation .
-Refer to Fact Pattern 40-1B. Trawlers owed money to View Harbor Storage and other creditors. After the consolidation, UFC must pay
A) all of Trawlers' debts.
B) half of Trawlers' debts.
C) none of Trawlers' debts.
D) only debts that Trawlers incurred after consolidation was proposed.

Accepted Answer

When two companies consolidate, the surviving company takes on all the assets and liabilities of the combining companies. Therefore, Unique Fishers Corporation (UFC) must pay all of Trawlers' debts, including those owed to View Harbor Storage and other creditors.

Question 15

Fact Pattern 40-1A 
Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains.
-Refer to Fact Pattern 40-1A. Cherry Grove owed money to Eager Beaver Repair Service and other creditors. Af?ter the merger, Dutch Elm must pay
A) all of Cherry Grove's debts.
B) half of Cherry Grove's debts.
C) none of Cherry Grove's debts.
D) only debts that Cherry Grove incurred after a merger was proposed.

Accepted Answer

When two companies merge and one company ceases to exist, the surviving company assumes all liabilities and debts of the company that no longer exists.

Question 16

Like other corporations, Workday Personnel Corporation can expand its operations through
A) a liquidation and distribution of its assets.
B) an acquisition of a controlling interest in another corporation.
C) articles of dissolution filed voluntarily with the state.
D) a purchase of raw materials to be converted into finished goods.

Accepted Answer

An acquisition of a controlling interest in another corporation allows Workday Personnel Corporation to expand its operations by taking over an established company with an existing customer base, infrastructure, and resources. This method is a common strategy for corporations to grow and increase their market share. The other choices - liquidation, dissolution, and purchasing raw materials - do not directly contribute to expanding a corporation's operations.

Question 17

Like other corporations, Beauty Supplies Corporation can extend its operations through
A) a consolidation.
B) a dissolution.
C) a termination.
D) a winding up.

Accepted Answer

A consolidation is the process of combining two or more corporations into a larger one. This allows Beauty Supplies Corporation to expand its operations and increase its market share. Dissolution, termination, and winding up all involve ending the operations of a corporation, which is the opposite of what Beauty Supplies Corporation wants to achieve.

Question 18

Refer to Fact Pattern 40-2A. Royal Oil assumes
A) all of Petro's and Quality's assets.
B) half of Petro's and Quality's assets.
C) none of Petro's and Quality's assets.
D) only debts that Petro and Quality incurred after a combina?tion was proposed.

Accepted Answer

Royal Oil assumes all of Petro's and Quality's assets in a merger or acquisition.

Question 19

Steel Tool Corporation and Thrifty Hardware Company combine so that all that remains after the papers have been signed is Steel Tool. This is
A) a consolidation.
B) a merger.
C) a purchase of assets.
D) a purchase of stock.

Accepted Answer

A merger is when two companies combine to form a new entity, which is what happened when Steel Tool Corporation and Thrifty Hardware Company combined. A consolidation would involve the two companies merging into an existing entity, which is not what occurred. A purchase of assets or stock would involve one company buying a portion or all of another company, which is also not what happened in this scenario.

Question 20

Refer to Fact Pattern 40-2A. The formation of Royal Oil is
A) a consolidation.
B) a dissolution.
C) a liquidation.
D) a merger.

Accepted Answer

Royal Oil is formed by combining two or more existing companies into a single new company. This is a consolidation.

Quiz 40: Corporationsmerger, Consolidation, Termination

Refer to Fact Pattern 40-2A. Royal Oil acquires

Realty Credit Company and Second Mortgage Corporation plan to con?solidate. Most likely, the articles of consolidation will be filed with

Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger

Candy Corporation has a right of action against Dina. Candy merges with Eats, Inc., with Eats absorbing Candy. After the merger, Candy's right of action against Dina can be exercised by

Office Company and Kappa Company wish to combine all assets, stock, and personnel into a new firm to be called OK Corporation. This is

Fact Pattern 40-1A Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains. -Refer to Fact Pattern 40-1A. The terms of the merger agreement differ from Dutch Elm's articles of incor?poration. The articles

A merger between Frosted Confections, Inc., and Great Brewing Company can be expressed as Frosted Confections + Great Brewing =

Vacation Destination, Inc., and Wonder Resort Corporation plan to merge. Most likely, the ar?ticles of merger will be filed with

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with

Fact Pattern 40-1B Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation . -Refer to Fact Pattern 40-1B. The terms of the consolidation agreement dif?fer from Shrimp Boat's articles of incor?poration. The articles

Fact Pattern 40-1A Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains. -Refer to Fact Pattern 40-1A. Cherry Grove held rights in certain real property. After the merger, Dutch Elm acquires the rights

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Through a certain transaction, Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This is

Fact Pattern 40-1B Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation . -Refer to Fact Pattern 40-1B. Trawlers had rights in certain property. Af?ter the consolidation, UFC acquires the rights

Fact Pattern 40-1B Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique Fishers Corporation . -Refer to Fact Pattern 40-1B. Trawlers owed money to View Harbor Storage and other creditors. After the consolidation, UFC must pay

Fact Pattern 40-1A Cherry Grove Apartments, Inc., merges with Dutch Elm Realty, Inc. Only Dutch Elm remains. -Refer to Fact Pattern 40-1A. Cherry Grove owed money to Eager Beaver Repair Service and other creditors. Af?ter the merger, Dutch Elm must pay

Like other corporations, Workday Personnel Corporation can expand its operations through

Like other corporations, Beauty Supplies Corporation can extend its operations through

Refer to Fact Pattern 40-2A. Royal Oil assumes

Steel Tool Corporation and Thrifty Hardware Company combine so that all that remains after the papers have been signed is Steel Tool. This is

Refer to Fact Pattern 40-2A. The formation of Royal Oil is