Question

The Palace Hotel Group purchased Orange Roof Hotels for an estimated value of $120 billion. All the hotels previously owned by Orange Roof Hotels are now managed by the Palace Hotel Group and are known as Palace hotels. What does this scenario best illustrate?

Answer 1

Answer:

This scenario best illustrates an acquisition.

Explanation:

Acquisition refers to the situation where a company gains control of the other company by purchasing all or most of its shares. Acquisitions are common in small and medium-sized firms and may happen with or without the consent of the target company.

In the given example, Orange roof hotels are the target company that is being purchased by the Palace Hotel group which will now control the assets of the Orange roof hotels and take business decisions.

Answer 2

Answer: The scenario best describe acquisition

Explanation:

Acquisition can be defined as the process whereby an existing company decided to buy an additional business,and therefore take ownership of the business. In this case, the purchase price may be totally in cash or partly in cash and partly in shares in the company. Under the terms of the contract, which stipulates the conditions for the acquisition of the business. The terms of the contract may include that the purchase price will include payment for Goodwill and for the assets, which may or may not include the cash balance. If the liabilities are taken over, it must be agreed that it must be within the balance sheet of the business.