2. Balance Sheets for Mergers Consider the following premerger information about Firm X and Firm Y:...

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2. Balance Sheets for Mergers Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings Shares outstanding $30,000 S20,000 20,000 20,000 Per-share values: $ 75 $ 25 $ 20 Market Book Assume that Firm X acquires Firm Y by paying cash for all the shares outstand- ing at a merger premium of $8 per share. Assuming that neither firm has any debt before or after the merger, construct the postmerger balance sheet for Firm X assuming the use of (a) pooling of interests accounting methods and (b) purchase accounting methods. 2. Balance Sheets for Mergers Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings Shares outstanding $30,000 S20,000 20,000 20,000 Per-share values: $ 75 $ 25 $ 20 Market Book Assume that Firm X acquires Firm Y by paying cash for all the shares outstand- ing at a merger premium of $8 per share. Assuming that neither firm has any debt before or after the merger, construct the postmerger balance sheet for Firm X assuming the use of (a) pooling of interests accounting methods and (b) purchase accounting methods.

Answer rating: 100% (QA)

List of assets of the combined firm 1 Assets Firm X Shares outstanding of firm X x Book valu... View the full answer