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Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 79,000 $ 14,000 Shares outstanding 36,000 11,000
Consider the following premerger information about Firm X and Firm Y: |
Firm X | Firm Y | |||||
Total earnings | $ | 79,000 | $ | 14,000 | ||
Shares outstanding | 36,000 | 11,000 | ||||
Per-share values: | ||||||
Market | $ | 51 | $ | 16 | ||
Book | $ | 11 | $ | 6 | ||
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $8 per share, and that neither firm has any debt before or after the merger. |
List the assets of the combined firm assuming the purchase accounting method is used. |
Assets from X | $ |
Assets from Y | |
Goodwill | |
Total Assets XY | $ |
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