Question 1: In a merger, the acquiring firm assumes all liabilities of the targe

Question

Question 1: In a merger, the acquiring firm assumes all liabilities of the target firm. Assumed liabilities include all but one of the following?  

a.            Current liabilities

b.            Long-term debt

c.            Warranty claims

d.            Depreciated operating equipment

e.            Off-balance sheet liabilities

Question 2: All of the following are true of buyer due diligence except for:  

a.            Due diligence is the process of validating assumptions underlying valuation

b.            Can be eliminated and replaced by appropriate representations and warranties in the agreement of purchase and sale

c.            A primary objective is to identify the sources and destroyers of value

d.            Always consists of operational, financial, and legal reviews

e.            Endeavors to identify the

Explanation / Answer

Question 1: In a merger, the acquiring firm assumes all liabilities of the target firm. Assumed liabilities include all but one of the following?

Answer

d.            Depreciated operating equipment

In merger targeted firm would not include depreciation of any asset in its as its record those asset at Net Book value i.e Cost less accumulated depreciation or Fair Value .

Therefore except to depreciation all other liabilty are being recored on the targeted fitm.

Note : Please do not ask multiple question in single question as per chegg rule you must ask single question, Please ask seperately

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