A business combination in which the acquired company's assets and liabilities are combined with those of the acquiring company into a single entity is defined as:

 A business combination in which the acquired company's assets and liabilities are combined with those of the acquiring company into a single entity is defined as:

Multiple Choice

Stock acquisition


Leveraged buyout


Statutory merger Correct

Reverse statutory rollup

Explanation
Statutory merger is the correct answer. A statutory merger is a type of business combination in which only one of the combining companies survives and the other loses its separate identity. The acquired company’s assets and liabilities are transferred to the acquiring company, and the acquired company is dissolved, or liquidated.

Stock acquisition is incorrect. A stock acquisition occurs when one company acquires the voting shares of another company and the two companies continue to operate as separate, but related, legal entities.

Leveraged buyout is incorrect. A leveraged buyout results when an acquiring company borrows the funds to buy another company. This practice was common in the 1980’s. However, the resulting debt plagued many of those companies for many years.

Reverse statutory rollup is incorrect. A reverse statutory rollup is not a situation in which the acquired company’s assets and liabilities are combined with those of the acquiring company into a single entity.