Limiting Legal Liability and Consistency Pentex is having merger discussions with Sentex. All of Pentex’s business acquisitions to date have been acquisitions of common stock resulting in parentsubsidiary relationships. Pentex prefers to legally insulate each of its acquired businesses from all other operations. Sentex has been and still is involved as a defendant in several lawsuits. As a re¬

sult, Pentex plans to acquire Sentex’s assets to insulate itself from any current or potential legal en¬

tanglements.

Required 1. How could Pentex achieve the objective of insulating the business of Sentex?

2. Is the consistency principle violated as a result of acquiring assets} Why or why not?