Question: Look again at Table 33.3. Suppose that B Corporation?s fixed assets are reexamined and found to be worth $1.2 million instead of $.9 million. How

Look again at Table 33.3. Suppose that B Corporation?s fixed assets are reexamined and found to be worth $1.2 million instead of $.9 million. How would this affect the AB Corporation?s balance sheet under purchase accounting? How would the value of AB Corporation change? Would your answer depend on whether the merger is taxable?

Initial Balance Sheets A Corporation B Corporation NWC 2.0 3.0 NWC .1

Initial Balance Sheets A Corporation B Corporation NWC 2.0 3.0 NWC .1 FA 8.0 10.0 7.0 10.0 FA .9 1.0 1.0 1.0 Balance Sheet of AB Corporation NWC 2.1 3.0 FA 8.9 8.8 Goodwill .8 11.8 11.8

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