Question
Balance Sheets for Mergers Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total Earnings $87,000 $11,000 Shares Outstanding
Balance Sheets for Mergers
Consider the following premerger information about Firm X and Firm Y:
| Firm X | Firm Y | |
| Total Earnings | $87,000 | $11,000 |
| Shares Outstanding | 35,000 | 12,000 |
| Per-share values: | ||
| Market | $57 | $19 |
| Book | $7 | $3 |
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, construct the post merger balance sheet for Firm X assuming the use of purchase accounting.
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
5th edition
321280299, 321280296, 978-0321280299
