Certified Management Accountant Practice Exam 2026 – The Comprehensive All-in-One Guide to Exam Success!

A merger typically involves two companies coming together to form a single entity, where one company often absorbs the other. This process leads to the dissolution of the acquired firm's separate legal status, as it becomes part of the acquiring company. The merging entities usually combine their assets, liabilities, and operations with the intention of enhancing efficiencies, market reach, or financial performance.

In this context, the understanding of a merger aligns with the nature of uniting resources and integrating operations to achieve strategic objectives, which includes the termination of the acquired company's independent existence. Other choices do not capture this fundamental nature of a merger; a new joint venture suggests a collaborative relationship rather than a full merger, remaining as independent entities implies that both firms would operate separately, and collaboration without financial transaction does not meet the requirements involving a merger that involves ownership stakes.