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Horizon Ltd. acquires Epsilon Inc. for $65 million cash. The balance sheets before the merger show: Balance Sheet (in millions) Horizon Epsilon Current assets $70

Horizon Ltd. acquires Epsilon Inc. for $65 million cash. The balance sheets before the merger show:

Balance Sheet (in millions)

Horizon

Epsilon

Current assets

$70

$12

Property and equipment

$500

$100

Intangibles

$35

$7

Total assets

$605

$119

Current liabilities

$30

$2

Long-term debt

$400

$50

Capital stock

$50

$10

Retained earnings

$125

$55

Accumulated other comp. inc.

$(15)

$2

Total liabilities and equity

$605

$119

Epsilon’s property is overvalued by $20 million, and intangibles are undervalued by $5 million.

Required: Prepare Horizon’s balance sheet immediately following the merger.

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