Question
In: Finance
1.The pre merger balance sheets of firm A and B are given below.Firm A is interested...
1.The pre merger balance sheets of firm A and B are given below.Firm A is interested in taking over firm B.Prepare the post- merger balance sheet for firm A according to the pooling of interest method.
| Firm A | |||
| Current Assets | US $10000 | Current Liabilities | US $6000 |
| Net Fixed Assets | US$35000 | Long Term Debt | US $10000 |
| Equity | US$29000 | ||
| Total | US $45000 | US$45000 |
| Firm B | |||
| Current Assets | US$4000 | Current Liabilities | US$2000 |
| Net Fixed Assets | US$7000 | Long Term Debt | US$2500 |
| Equity | US$6500 | ||
| Total | US$11000 | US$11000 |
2.Using the Same balance sheets in Question 1,Prepare the post -merger balance sheet for A under the Purchase Method.Take into account the following additional information:
(A) The fair value of the firm B's net fixed assets is US$10000
(B) Firm A pays US$20000 for firm Band Finances the purchase by issuing additional long -term debt
Solutions
jeff jeffy answered 11 months agoRelated Solutions
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm...
Consider the following pre-merger information about a bidding
firm (Firm B) and a target firm (Firm T). Assume that both firms
have no debt outstanding.
Firm B
Firm T
Shares Outstanding
8,700
3,600
Price per Share
$47
$19
Firm B has estimated that the value of the synergistic benefits
from acquiring Firm T is $16,700. Suppose Firm B agrees to a merger
by an exchange of stock. If B offers one of its shares for every 2
of T's shares....
Firm A is considering a merger with Firm B. The current market value of A is...
Firm A is considering a merger with Firm B. The
current market value of A is $20,000,000 and the volatility of
asset return is 58% percent. A also has a zero coupon bond with a
face value of $8,000,000 that matures in 3 years. B’s market value
is $9,000,000 with standard deviation of asset return of 70% and a
zero coupon bond of $3,000,000 that matures in 3 years. The
continuously compounded risk free rate is 4%. After the merger...
Firm A is considering a merger with Firm B. Based on the following data, what is...
Firm A is considering a merger with Firm B. Based on the
following data, what is the stock exchange ratio if Firm A
negotiates a merger with Firm B and if all the synergy gain goes to
Firm B's shareholders?
Firm A:
Market value of debt: $2 million
Market value of equity: $4 million
Number of shares: 0.2 million
Estimated total firm value based on value-based management model
if the merger takes place: 10 million
Firm B:
Market value of...
Firm A is considering a merger/acquisition with Firm B. Firm A: Market value of debt: $2...
Firm A is considering a merger/acquisition with Firm B.
Firm A:
Market value of debt: $2 million
Market value of equity: $4 million
Number of shares: 200,000
Firm B:
Market value of debt: $5 million
Market value of equity: $5 million
Number of shares: 500,000
Investment rate for the combined firm (bA+B): 70%
WACC for the combined firm (WACCA+B): 10%
Total net operating income before synergy gain: (X): $3
million
Synergy rate (a): 15%
Corporate tax rate (T): 40%
Growth...
The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given...
The comparative balance sheets for 2021 and 2020 and the income
statement for 2021 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided
also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
2021
2020
Assets
Cash
$
114
$
86
Accounts receivable
195
204
Investment revenue receivable
12
9
Inventory
213
205
Prepaid insurance
10
18
Long-term investment
172
130
Land
207
155
Buildings and equipment
424
410
Less: Accumulated...
Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given...
Comparative balance sheets for 2021 and 2020 and a statement of
income for 2021 are given below for Metagrobolize Industries.
Additional information from the accounting records of Metagrobolize
also is provided.
METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2021 and 2020
($ in thousands)
2021
2020
Assets
Cash
$
480
$
250
Accounts receivable
550
290
Inventory
700
400
Land
700
650
Building
800
800
Less: Accumulated depreciation
(250
)
(215)
Equipment
3,000
2,750
Less: Accumulated depreciation
(355
)
(320...
The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given...
The comparative balance sheets for 2021 and 2020 and the income
statement for 2021 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided
also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
2021
2020
Assets
Cash
$
109
$
81
Accounts receivable
190
194
Investment revenue receivable
6
4
Inventory
205
200
Prepaid insurance
4
8
Long-term investment
156
125
Land
196
150
Buildings and equipment
412
400
Less: Accumulated...
Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given...
Comparative balance sheets for 2018 and 2017 and a statement of
income for 2018 are given below.
METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
390
$
190
Accounts receivable
450
240
Inventory
600
375
Land
600
560
Building
900
900
Less: Accumulated depreciation
(300
)
(285
)
Equipment
2,750
2,450
Less: Accumulated depreciation
(430
)
(400
)
Patent
1,500
1,650
$
6,460
$
5,680
Liabilities
Accounts payable
$
700...
Comparative balance sheets for 2018 and 2017 and a statement of income for 2018 are given...
Comparative balance sheets for 2018 and 2017 and a statement of
income for 2018 are given below for Metagrobolize Industries.
Additional information from the accounting records of Metagrobolize
also is provided.
METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
440
$
190
Accounts receivable
470
250
Inventory
620
380
Land
625
575
Building
800
800
Less: Accumulated depreciation
(200
)
(170)
Equipment
2,800
2,510
Less: Accumulated depreciation
(451
)
(420...
The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given...
The comparative balance sheets for 2021 and 2020 and the income
statement for 2021 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided
also.
ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
2021
2020
Assets
Cash
$
113
$
83
Accounts receivable
192
198
Investment revenue receivable
10
6
Inventory
209
202
Prepaid insurance
8
12
Long-term investment
164
127
Land
200
152
Buildings and equipment
414
404
Less: Accumulated...
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