None In July 2007, News Corporation entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company for$63 per share. Immediately prior to the News Corporation bid, the shares of Dow Jones traded at $38 per share. The number ofoutstanding shares at the time of the announcement was 83 million. The book value of interest-bearing liabilities on the balance sheetof Dow Jones was $1.48 billion.a. Estimate the cost of this acquisition to the shareholders of News Corporationb. What value did News Corporation place on the control of Dow Jones and Company?Note: For all requirements, enter your answers in billions rounded to 2 decimal places.Estimated cost of the acquisitionValue of controlbillionbillion

aCost of acquisition = (Purchase price * Shares outstanding) + LiabilitiesCost of acquisition = (63…

Answered: In July 2007, News Corporation entered…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 5, 2018 Johnson Co. announced their planned acquisition of Smith Co. The following is a summary of the consideration to be paid for the acquisition. Cash: $10 million Stock: 1 million shares of Johnson Co. common stock. At January 5 the market price of the stock was $20 per share, but as of the date the transaction closed, Johnson Co. stock was trading at $25 per share. Contingent Consideration: The selling shareholders of Smith Co. are entitled to receive $2 million upon receipt of FDA approval (by December 31, 2018) of a medical device Smith is developing that is under review by the FDA. FDA approval is the sole contingency which must be resolved for the contingent consideration to be paid, however if approval is not received by the deadline, no payment is due. As of the acquisition date, Johnson believes there is 80% likelihood the contingent consideration will be paid. 1. What is the amount of consideration used to record this business combination under IFRS? Under US…
On August 27, 2015, Celgene Corporation acquired all of the outstanding stock of Receptos, Inc., in exchange for $7.6 billion in cash. Referring to Celgene's 2015 financial statements and its July 14, 2015, press release announcing the acquisition, answer the following questions regarding the Receptos acquisition. Why did Celgene acquire Recentos?
Bayside Fishing Supply Co.is acquiring Fishing Lure Specialists for $25,250 in cash. Bayside Fishing Supply Co. has 2,350 shares outstanding at a market price per share of $39. Fishing Lure Specialists has 1,500 shares outstanding at $16 per share. Neither firm has outstanding debt. The incremental value (synergy) of the acquisition is $2,300. What is the value of Bayside Fishing Supply Co. after the acquisition? A $89,150 B $56,650 C $88,950 D $92,700 E) $73,750
Firm A is being acquired by Firm B for $62,000 worth of Firm B stock. The incremental value of the acquisition is $4,300. Firm A has 2,700 shares of stock outstanding at a price of $22 a share. Firm B has 10,400 shares of stock outstanding at a price of $31 a share. What is the actual cost of the acquisition using company stock?
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The solution must be under the GAAP standards
On May 31, 2011, Armstrong Company paid P3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets P900,000 Current liabilities P600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders’ equity 2,500,000 Total liabilities and Total assets P3,600,000 stockholders’ equity P3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was P2,800,000. At December 31, 2011, Hall reports the following balance sheet information: Current assets P800,000 Noncurrent assets (including goodwill…
Assume that the acquisition was completed in 5 months (150 days). Assume further that Siegel purchased 300,000 shares of AXYS at an average cost of $4.15, and shorted 29,800 shares of Celera. Siegel funded 70% of his purchase with debt. Celera's share price on the closing date was $27.43. Assuming a borrowing cost of 8%, calculate the return on Siegel's investment for the holding period and on an annualized basis.
Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams’s investment in Barstow.
Moon Company is contemplating the acquisition of Yount, Inc., on January 1, 2015. If Moon acquires Yount, it will pay $730,000 in cash to Yount and acquisition costs of $20,000. The January 1, 2015, balance sheet of Yount, Inc., is anticipated to be as attached:Fair values agree with book values except for the inventory and the depreciable fixed assets, which have fair values of $70,000 and $400,000, respectively. Your projections of the combined operations for 2015 are as follows: Combined sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 Combined cost of goods sold, including Yount’s beginning inventory, at book value, which will be sold in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Other expenses not including depreciation of Yount assets . . . . . . . . . . . . . . . . . . . . . . . . 25,000Depreciation on Yount fixed assets is…
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:The companies’ financial statements for the year ending December 31, 2018, follow:Answer the following questions:a. How can the accountant determine that the parent has applied the initial value method?b. What is the annual excess amortization initially recognized in connection with this acquisition?c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?d. What amount should the parent report as retained earnings in its January 1, 2018, consolidated balance sheet?e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?f. Within consolidated statements at January 1,…

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