Question
Balance Sheets for Mergers [LO2] Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $87.000 $11,000 Shares
Balance Sheets for Mergers [LO2] 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 postmerger balance sheet for Firm X assuming the use of purchase accounting.
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
