12–17. Acquiring Company buys Target Company for $5 million in cash. As an analyst, you are given the premerger balance sheets for the two companies

(Table 12–6). Assuming plant and equipment are revalued upward by Table 12–6 Premerger Balance Sheets for Companies in Problem 12–17 (in dollars)
Acquiring Company Target Company Current assets 600,000 800,000 Plant and equipment 1,200,000 1,500,000 Total assets 1,800,000 2,300,000 Long-term debt 500,000 300,000 Shareholders’ equity 1,300,000 2,000,000 Shareholders’ equity þ total liabilities 1,800,000 2,300,000

$500,000, what will be the combined companies’ shareholders’ equity plus total liabilities? What is the difference between Acquiring Company’s shareholders’ equity and the shareholders’ equity of the combined companies?
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