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Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 88,000 $ 18,500 Shares outstanding 45,000 20,000
Consider the following premerger information about Firm X and Firm Y: |
Firm X | Firm Y | |||||
Total earnings | $ | 88,000 | $ | 18,500 | ||
Shares outstanding | 45,000 | 20,000 | ||||
Per-share values: | ||||||
Market | $ | 45 | $ | 16 | ||
Book | $ | 16 | $ | 7 | ||
Assume that Firm X acquires Firm Y by issuing long-term debt for all the shares outstanding at a merger premium of $5 per share, and that neither firm has any debt before the merger. |
List the assets of the combined firm assuming the purchase accounting method is used. |
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