• The combining of two or more firms to form an entirely new entity.

• The combination of two or more firms to form a completely new corporation.

 Embedded terms in definition
 Referenced Terms
 Acquisition of assets: A merger or Consolidation in which an acquirer purchases the selling firm's assets.

 Acquisition of stock: A merger or Consolidation in which an acquirer purchases the acquiree's stock.

 Current rate method: Under this currency translation method, all foreign currency balance-sheet and income statement items are translated at the current exchange rate.All financial transactions are measured in the currency of the foreign operations and Consolidation occurs by converting all balance sheet accounts at the exchange rate in effect at the close of the fiscal year and all income statement accounts at the average exchange rate for the fiscal year.

 Purchase method: Accounting for an acquisition using market value for the Consolidation of the two entities' net assets on the balance sheet. Generally, depreciation/amortization will increase for this method compared with pooling and will result in lower net income.

 Tax free acquisition: A merger or Consolidation in which 1) the acquirer's tax basis in each asset whose ownership is transferred in the transaction is generally the same as the acquiree's, and 2) each seller who receives only stock does not have to pay any tax on the gain he realizes until the shares are sold.

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