Company A has purchased Company T. Both companies' balance sheets (at book value) and income statements are shown below. Company A has identified the fair value of T's current assets to be $20 and its fixed assets to be $55. Any increase in fixed asset value is depreciated straight line over 5 years, and any increase in the current asset value is assumed to be inventory. Inventory turns over 2 times per year?

a. Create the balance sheet for the merged company, assuming that A acquired T for (i) $30 and (ii) $55 (both amounts in cash).
b. Assume that A has 100 shares outstanding before the merger and that T has 55 shares. Calculate the EPS for both companies.
c. Construct the income statement and calculate the EPS for the merged company based on a 1:1 share exchange?

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Balance Sheets Company A Company T $ 55 95 $15 Current assets Fixed assets Total assets Liabilities Equity Total liab. & equity Current assets Fixed assets Total assets Liabilities Equity Total liab. & equity $65 $25 40 $65 $ 50 100 $150 Income Statements Company A Company T Sales Costs Taxable income Taxes (30%) Net income $ 50 30 20 $100 Sales Costs Taxable income Taxes (30%) Net income 14