Acquiring Company buys 100% of target Companys equity for $5million in cash. As an analyst, you are given the premerger balance sheets for the two companies below. Assuming plant and equipment are revalued upward by $500,000, what will be the combined companies shareholders equity plus total liabilities? What is the difference between Acquiring Companys shareholders equity and the shareholders equity of the combined companies?

Please show your work.

Premerger balance sheets for the above companies

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 +

Total Liabilities 1,800,000 2,300,000