Consider the following pre-merger information about firm X and firm Y:Firm XFirm Y$90,000$52,20046,80036,000Total earningsShares outstandingPer-share values:MarketBook$53$ 21$ 19SASA$ 9Assume that firm X acquires firm Y by paying cash for all the shares outstanding at amerger premium of $5 per share. Assuming that neither firm has any debt before or afterthe merger, construct the post-merger balance sheet for firm X assuming the use ofpurchase accounting methods.

This method is also known as the acquisition method. When one company acquires another, the…

Answered: Consider the following pre-merger…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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EPS and merger terms Expanding Corporation is interested in acquiring Target Company by swapping 0.4 share of its stock for each share of Target's stock. Certain financial data on these companies are given in the following table. Expanding Co. has sufficient authorized but unissued shares to carry out the proposed merger. Item Expanding Co. Target Co. Earnings Available for common stock $200,000 $50,000 Number of shares of common stock outstanding 50,000 20,000 Earnings per share (EPS) $4.00 $2.50 Market price per share $50 $15 Price/earnings (P/E) ratio 12.5 6 How many new shares of stock will Expanding have to issue to make the proposed merger? If the earnings for each firm remain unchanged, what will the post merger earnings per share be?
Chapter 2. 1. On 12/31, Choco acquired all assets and liabilities of Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share and this combination is a statutory merger (Cake was dissolved). Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding Choco Book Values Cake Book Values Cake Fair Values Cash and Receivable 350,000 180,000 170,000 Inventories 250,000 100,000 150,000 Land 700,000 120,000 240,000 Building and equipment 600,000 600,000 900,000 Patented technology 100,000 0 60,000 Accounts payable 300,000 120,000 150,000 Long-term debt 0 400,000 350,000 Common stock 750,000 300,000 Additional paid in capital 500,000 60,000 Retained earnings 12/31 450,000 120,000 Revenues 350,000 160,000 Expenses 310,000…
On 12/31, Choco acquired all assets and liabilities of Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share and this combination is a statutory merger (Cake was dissolved). Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding Choco Book Values Cake Book Values Cake Fair Values Cash and Receivable 350,000 180,000 170,000 Inventories 250,000 100,000 150,000 Land 700,000 120,000 240,000 Building and equipment 600,000 600,000 900,000 Patented technology 100,000 0 60,000 Accounts payable 300,000 120,000 150,000 Long-term debt 0 400,000 350,000 Common stock 750,000 300,000 Additional paid in capital 500,000 60,000 Retained earnings 12/31 450,000 120,000 Revenues 350,000 160,000 Expenses 310,000 130,000 Q1. How much is the consideration transferred? Q2. What is the consolidated balance for Land? Q3. What is the consolidated balance for Accounts…
T/F The npv of a merger equals the total value of the acquired firm minus the synergies created by the merger.
46. Consolidation at the end of the first year subsequent to date of acquisition-Equity method (purchase price equals book value) Assume a parent company acquires its subsidiary on January 1, 2022, by exchanging 30,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $17 per share, for all of the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation of these two companies at the end of the first year. On the acquisition date, all of the subsidiary's assets and liabilities had fair values equaling their book values. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. Following are financial statements of the parent and its subsidiary for the year ended December 31, 2022. LO2 X
Loki, Inc. and Thor, Inc. have entered into a stock-swap merger agreement whereby Loki will pay a 38% premium over Thor's pre-merger price. If Thor's pre-merger price per share was $40 and Loki's was $52, what exchange ratio will Loki need to offer? The ratio should be shares of Loki for every share of Thor. (Round to two decimal places.) C
Produce a consolidated balance sheet for Johnston Group as at 30 September 20X6 consistent with international accounting standards.
Company C merge With company D Company C shares = $17, 6 mill outstanding Company D shares = $5, 2 mill outstanding Synergies from merge = $4 mill OFFER = COmpany C offers 1 of own share for 3 of Company D shares Find NPV for company C if accepted
The Justice Department has been asked to review a merger request for a market with the following four firms. Firm Assets A $10 Million B 20 Million C 100 Million D 30 Million If Firm A acquires Firm D, what is the HHI for the new market? 4,687.50 3,906.25 625 100

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