Future Business Leaders of America (FBLA) Business Law Practice Exam

What is the typical result of an asset acquisition?

1. Merger of corporate identities

2. Complete dissolution of one corporation

3. Transfer of assets and liabilities

4. Expansion of executive positions

The correct answer is: Transfer of assets and liabilities

The correct answer reflects the understanding that an asset acquisition typically involves one company purchasing the assets of another company. In this process, the acquiring company gains control over specific assets, which can include property, equipment, and intellectual property, among others. Furthermore, liabilities associated with those assets can also be transferred, unless otherwise negotiated. This means that the acquiring company may also take on certain debts or contractual obligations related to the acquired assets, providing the new owner with both opportunities and responsibilities tied to those assets. While mergers typically involve a consolidation of corporate identities and may lead to the creation of a new entity, that is not a characteristic of asset acquisitions specifically. Additionally, in some cases, a corporation may not be completely dissolved after an asset acquisition; it could continue to exist in a different form or retain certain operations. Lastly, there is no inherent requirement for an asset acquisition to expand executive positions, as this would be determined by the strategic decisions of the acquiring company rather than the acquisition itself. Thus, the answer focuses on the essence of what happens during an asset acquisition: the transfer of specific assets and, potentially, related liabilities from one entity to another.