Consider the following premerger information about Firm X and Firm Y:Firm X Firm Y$96,000 $22,50053,000 18,000Total earningsSharesoutstandingPer-share values:MarketBook$$Assets from XAssets from YGoodwillTotal Assets XY53 $14 $18008Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at amerger premium of $5 per share, and that neither firm has any debt before or after themerger. Construct the postmerger balance sheet for Firm X assuming the use of thepurchase accounting method. (Do not round intermediate calculations and round youranswers to the nearest whole number, e.g., 32.)

When two existing companies join to form one new company, it is called merger. The companies merge…

Answered: merger. Construct the postmerger…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

If an investor sells merchandise to an investee and the investee resells all of the items to outside parties in the same period, what equity method entry is required?\\nSelect one:\\nA. No equity method entry is required, since the gross profit is realized.\\nB. The entire gross profit is deferred with a credit to Equity Income and Debit to Equity Investment\\nC. The entire gross profit is deferred with a debit to Equity Income and credit to Equity Investment.\\nD. The investor's percentage of the gross profit is deferred with a debit to Equity Income.
1
Suppose you a stock analyst are performing a ratio analysis and comparing a discount merchdiser with a high end merchandiser. Suppose further that both companies have identical ROE. IF You apply the dupont equation to both firms, would you expect the three components to be the same for both companies? If not, explain what balance balance sheet and income statements might lead to the differences in the Dupont equation components.
Describe TWO (2) different methods used to value a target company in an M&A deal. You need to compare those three valuation techniques.
4. The cost of an asset and its fair value are Select answer from the options below: a) irrelevant when the asset is used by the business in its operations. b)never the same. c) the same on the date of acquisition. d) the same when the asset is sold. 6. If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates Select answer from the options below: a. no errors can be discovered. b. no errors have been made. c. the mathematical equality of the accounting equation. d . that all accounts reflect correct balances. 7. The final step in the recording process is to Select answer from the options below: a. enter the transaction in a journal. b. prepare a trial balance. c. transfer journal information to ledger accounts. d. analyze each transaction. 8. The time period assumption states that Select answer from the options below: a. the economic life of a business can be divided into artificial time periods. b. estimates should not be made if a…
Which of the following actions will increase a company's quick ratio? (a) Reduce inventories and use the proceeds to reduce long-term debt.(b) Reduce inventories and use the proceeds to reduce current liabilities.(c) Issue short-term debt and use the proceeds to purchase inventory.(d) Issue equity and use the proceeds to purchase inventory.
Which statement regarding relative valuation is true? a. Relative valuation using book values is more accurate than using market values. b. Relative valuation is often focused on current ratios that can be used to compare similar assets or entities. c. The value of a share of a hotel business can be compared to the value of a share of an airline business. d. Peer group average is when comparison of multiple pairings of similar entities {e.g., A vs B, B vs Ca nd A vs C) are made.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

merger. Construct the postmerger balance sheet for Firm X assuming the use of the purchase accounting method. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)