Question on: JAMB Accounting - 2022
Bala Ltd acquired the business of Bello Ltd and caused the separate existence of the latter company to terminate. This situation is best described as?
A
absorption
B
merger
C
conversion
D
dissolution
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Correct Option: A
Absorption is the correct answer. When one company acquires another and the acquired company ceases to exist as a separate entity, it is termed absorption. The assets and liabilities of the absorbed company are transferred to the acquiring company.
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