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Depreciation

When one exis...

Question

When one existing company goes into liquidation and a new company is formed to take over its business, it is called an _____________.

A

Absorption

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B

Amalgamation

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C

External Reconstruction

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D

Internal Reconstruction

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Solution

The correct option is C External Reconstruction
External reconstruction means where the company goes in to liquidation which means sells its assets and liabilities to form a new company. They sell the assets and liabilities and form a new company with similar name.

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