Question

A(n) _____ occurs when two companies agree to combine operations to form a new company.

Answer 1

This type of situation is known as a merger. This is usually done when two companies need the support of each other to make a bigger company that will be able to create bigger sales. During a merger, a new investment pool is usually made by both the partners (the former owners of the previous two companies) The partners will then acquire the assets of both their old companies as well as their old debts. All of these will then be recorded in the books of the new company.