5. Financial reporting for mergers AaAa The Financial Accounting Standards Board (FASB) eliminated the use of pooling-of-interests method for the accounting of mergers occurring after January 1, 2000. Since then, all mergers have been handled as purchases for accounting purposes. Consider the following case: Company A buys Company B for $30. The value of Company B's equity (total assets minus its total liabilities) is $50. Which of the following statements best describes the merger's effect on the merged company's consolidated balance sheet? O On the consolidated balance sheet, Company B's common stock value will be written up (recorded) on Company A's books at a value greater than was recorded on Company B's books. O Company B's liabilities will be deducted from Company A's liabilities in the consolidated balance sheet. O On the consolidated balance sheet, the value of Company B's assets will be written down (recorded) on Company A's books at a value lower than was recorded on Company B's books. Two weeks ago, National Enterprises Inc. (NE) and Sanger Machine Company agreed to a merger in which National will purchase Sanger using a stock-for-stock transaction. National's latest evaluation of the deal expects no synergistic benefits from the merger and has noted that its common stock is currently priced at $80.00 per share; Sanger's shares are trading for $72.00 per share. National has offered a 20% premium over the current price for Sanger's shares