Question
Company Y has inventory worth $200mm and PP&E worth $500mm and no other assets. Company X buys company Y for $1B in cash. What happens
Company Y has inventory worth $200mm and PP&E worth $500mm and no other assets. Company X buys company Y for $1B in cash. What happens to the company X balance sheet after the acquisition?
Is the correct answer:
Company's X balance sheet will increase by only 700,000. The reason for this is that retained earnings will need to decrease by 300,000 to make up the 300,000 difference in assets.
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
978-0538453257
