Look again at Table 33.3. Suppose that B Corporation?s fixed assets are reexamined and found to be
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 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?
Transcribed Image Text:
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
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (10 reviews)
Table 333 becomes If the acquisition is taxfree then the value of AB Corporation does not c...View the full answer
Answered By
Wonder Dzidzormenu
As a professional accountant and a teacher, I explain account ing concepts in a more practical way that makes students more connected to the subject.
With over 10 years of teaching accounting , I offer a well constructed , easily understood and in-depth explanations to students questions.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Question Posted:
Students also viewed these Corporate Finance questions
-
Look again at Table 28.11. Calculate a common-size balance sheet and income statement for Estée Lauder. Table 28.11 End of Year Start of Year Balance Sheet 2 Assets Current assets: Cash and...
-
Look again at Table 28.11. At the end of fiscal 2011 Estée Lauder had 197 million shares outstanding 21 with a share price of $105. The company's weighted-average cost of capital was about...
-
Look again at Table 9.1. This time we will concentrate on Burlington Northern. a. Calculate Burlingtons cost of equity from the CAPM using its own beta estimate and the industry beta estimate. How...
-
Consider a country that imports steel and exports automobiles. The value per unit of cars exported is measured in units of thousands of dollars per car by the random variable X. The value per unit of...
-
Your friend says that, when jump-starting a dead battery, you should connect your live battery in parallel with the dead battery, which, in effect, replaces the dead one. Do you agree?
-
TextRequest reports that adults 1824 years old send and receive 128 texts every day. Suppose we take a sample of 2534-year-olds to see if their mean number of daily texts differs from the mean for...
-
Comment on the statement normal flow is the best-case scenario.
-
Gonzalez Company acquired $200,000 of Walker Co., 6% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $70,000 of the...
-
Let W be the subspace spanned by 2 Find a basis for W and the dimension of W. (Note that the reduced row echelon form of (a) Basis: (b) Dimension: 0 3 6 0 0 Toon 3 [1-30 0 0 0 is 6 0 0 0 0 -1 1101...
-
Javier is a police officer or Javier is a little league coach. If Javier is a police officer, then Javier is a community leader. Javier is a little league coach if and only if Javier is a community...
-
Explain the distinction between a tax-free and a taxable merger. Are there circumstances in which you would expect buyer and seller to agree to a taxable merger?
-
What was the common theme in Boone Pickenss attempts to take over Cities Service, Gulf Oil, and Phillips Petroleum? Did his efforts create value for these companies shareholders? How? Was economic...
-
The balance sheet data for Bell Computers, Inc., at August 31, 2016, and September 30, 2016, follow: Requirement The following are three independent assumptions about the business during September....
-
ASSA ABLOY's debt situation was good. Their debt decreased from 2018 to 2020 but increased significantly in the years following. According to Buffett, ASSA ABLOY is not a durable, competitive company...
-
Pharmacy Consulting is a privately held regional provider based in Ohio, with revenues of $25 million annually, and whose services include pharmacy, nursing and dietary nutrition care. Key client...
-
Allegion shows strengths in terms of ROA, ROE, and historical positive trends in cash, receivables, and property, plant & equipment. However, there are concerns about the substantial increases in...
-
Billy Bob Corp has a profit margin (income to sales) of 3.7%. Sales-to-assets measures a ratio of 6.6x. The capital structure of BBC is 40% debt & 60% equity. What is BBC's return on equity? (Answer...
-
A company intends to borrow RTGS$150 000 to finance the purchase of new machinery. The Finance manager is considering taking a 12% loan from First Capital Bank that will be amortized over the next 8...
-
Suppose that there is an LSM that predicts soil moisture with ( 2 x = 2 ) and a measurement system with ( 2 y = 1 ) if the models output and measurement is 0. 24 and 0. 27. Calculate the Kalman...
-
Find the market equilibrium point for the following demand and supply functions. Demand: 2p = - q + 56 Supply: 3p - q = 34
-
(A) Show that Ag 2 S(s) (K spa = 6 x 10 -30 ) should precipitate and that FeS(s) K spa = 6 x 10 2 ) should not precipitate from a solution that is 0.010 M Ag + and 0.020 M Fe 2+ , but otherwise under...
-
You have a project costing $1.50 that will produce two widgets, one each the first and second years after project completion. Widgets today cost $0.80 each, with the price growing at 2% per year. The...
-
Repeat Problem 17.18 assuming that the volatility of gold is 20% and that once opened, the mine can be costlessly shut down forever. What is the value of the mine? What is the price at which the mine...
-
Repeat Problem 17.18 assuming that the volatility of gold is 20% and that once opened, the mine can be costlessly shut down once, and then costlessly reopened once. What is the value of the mine?...
-
Gilbert Canned Produce (GCP) packs and sells three varieties of canned produce: green beans; sweet peas; and tomatoes. The company is currently operating at 82 percent of capacity. Worried about the...
-
The accounting records of Allen Insulation, Inc. reflected the following balances as of January 1, 20x0: Beginning Inventory: $190 units @ $120 The following transactions occurred in 20x0: January...
-
Sarasota Limited has a calendar-year accounting period. The following errors were discovered in 2023. 1. The December 31, 2021 merchandise inventory had been understated by $50,400. 2. 3. Merchandise...
Study smarter with the SolutionInn App