The conservatism constraint prescribes that: a. when multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used. b. a company use the same accounting methods period after period. c. revenues and expenses are reported in the period in which they are earned or incurred. d. all items of a material nature are included in financial statements. e. all inventory items are reported at full cost.

Garrett is an executive vice president at samm hardware. he researches a proposal by a larger company, maximum hardware, to combine the two companies. by analyzing past performance, conducting focus groups, and interviewing maximum employees, garrett concludes that maximum has poor profit margins, sells shoddy merchandise, and treats customers poorly. what actions should garrett and samm hardware take? a. turn down the acquisition offer and prepare to resist a hostile takeover. b. attempt a friendly merger and use managerial hubris to improve results at maximum. c. welcome the acquisition and use knowledge transfer to impart sam hardware's management practices. d. do nothing; the two companies cannot combine without samm hardware's explicit consent.