Question

B&G, Inc.

A year ago, Kevin went to work for B&G, Inc. He has worked for the finance department ever since he started. He noticed that the corporation was only taxed as though it were a partnership. This was something that he found very odd when he first started working for the company, but he later realized it was a fairly common practice. He recognized that this was one of the advantages of this type of corporation.

While the job was challenging, Kevin was not happy. He wanted to work for a company whose main goal was to provide service to the community, not to make a profit. However, Kevin felt that, considering his present financial situation, he had to continue working for B&G, Inc. A week later, Kevin discovered there was going to be a merger between B&G, Inc. and one of its major competitors. Kevin's boss informed him that he would be getting a promotion and a raise. While he was excited about making more money, he still was not happy. He knew then that he would not be working for the company for long.

ABCDE

5.

Refer to B&G, Inc. What type of corporation is B&G, Inc.?

a.

Sole proprietorship

b.

Government-owned corporation

c.

S-corporation

d.

Not-for-profit corporation

e.

Cooperative

ABCDE

6.

Refer to B&G, Inc. Which of these features does not belong to this type of corporation?

a.

No double taxation

b.

Management flexibility

c.

Limited liability

d.

Personal asset protection

e.

Many Internal Revenue tax regulations

ABCDE

7.

Refer to B&G, Inc. What type of organization was Kevin considering switching to?

a.

Limited-liability corporation

b.

Government-owned corporation

c.

S-corporation

d.

Not-for-profit corporation

e.

Closed corporation

ABCDE

8.

Refer to B&G, Inc. B&G, Inc. was going through a ____ merger.

a.

vertical

b.

horizontal

c.

conglomerate

d.

hostile

e.

leveraged

ABCDE

9.

Refer to B&G, Inc. If the company had decided to let the managers have the opportunity to purchase the company and take it private with borrowed funds instead of this merger with a competitor, it would have been considered a

a.

leveraged buyout.

b.

proxy buyout.

c.

tender buyout.

d.

cooperative buyout.

e.

simple buyout.

Answer 1

Solution:

Question 5:

The answer is (c.) S-Corporation, because in the second line of first paragraph it is given that kevin has noticed that B&G ,Inc. is taxed under corporation.

Option (a) (b) (d) (e) is not correct because B&G ,Inc. is a corporation.

Question 6:

The answer is (e) Many Internal Revenue tax regulations, because remaining options are applies to this type of corporation.

Option (a) is feature of corporation because there is no double taxation.

Option (b) is feature of corporation because corporation can change its management as per its flexibility.

Option (c) is feature of corporation because liability is a limited to the assets of the corporation.

Option (d) is feature of corporation because as liability is limited to corporation assets, so there will be personal asset propection.

Question 7:

The answer is (d)Not-For-Profit-Corporation, because in the first and second lines of second paragraph it is given that kevin want to work for corporation whose main goal was to provide service to the community..

Option (a) (b) (c) (e) is not correct because Option (d ) is correct.

Question 8:

The answer is (b) horizontal, because B&G ,Inc. is merged with other corporation in the same industry.

Option (a) is not correct because veritcal merger happens between 2 corporation producing different goods and services under one industry but here both corporation are producing same products.

Option (c) is not correct because conglomerate merger happens between 2 corporation producing unrelated products of differnet corporation but here both corporation are producing same products.

Option (d) is not correct because Hostile merger occurs when corporation is takeover by another without its consent.

Option (e) is not correct because leveraged happens when financial sponsor and banks takeover corporation by showing their holding in equity and debt.

Question 9:

The answer is (d)Cooperative /Management Buyout, because company had decided to let the managers have the opportunity to purchase the company and take it private with borrowed funds instead of this merger with a competitor.

Option (a) (b) (c) (e) is not correct because Option (d ) is correct.