Consider the following premerger information about Firm X and Firm Y:

Firm X

Firm Y

Total earnings

$86,000

$17,500

Shares outstanding

43,000

18,000

Per-share values:

Market

$58

$14

Book

$18

$9

Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $7 per share, and that neither firm has any debt before or after the merger. Construct the postmerger balance sheet for Firm X assuming the use of the purchase accounting method. (Do not round intermediate calculations.)

Assets from X$

Assets from Y

Goodwill

Total Assets XY$

References