Entity a and Entity B Agree to Merge

Entity A and Entity B agree to merge. The capital structure of each entity is:
Entity A - 100 ordinary shares
Entity B - 60 ordinary shares
Entity A issues 2.5 shares in exchange for each ordinary share of Entity B. All of Entity B's shareholders exchange their shares for Entity A shares.
Which of the following statement is correct?

A) Entity A is both the parent and the acquirer in the transaction.
B) Entity B is both the parent and the acquirer in the transaction.
C) Entity A is the legal parent of the subsidiary Entity B and Entity B is the acquirer in the transaction.
D) Entity B is the parent and Entity A is the acquirer in the transaction.

Correct Answer:

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