Acquiring Company buys 100% of target Companys equity for $5million in cash.

As an analyst, you are given the premerger balance sheets for the 2 companies below.

1. Assuming plant and equipment are revalued upward by $500,000, what will be the combined companies shareholders equity plus total liabilities?

2. What is the difference between Acquiring Companys shareholders equity and the shareholders equity of the combined companies?

Please show all your work.

Pre-merger balance sheets for above companies

	Acquiring Company	Target Company
Current Assets	600,000	800,000
Plant & 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