Asset acquisition vs. stock purchase (fair value equals book
value)
Assume that an investor purchases the business of an investee. The
investee company reports the following balance sheet on the
acquisition date:
Cash
$2,800
Accounts payable
$5,600
Accounts receivable
5,600
Accrued liabilities
8,400
Inventories
11,200
-
Current assets
19,600
Current liabilities
14,000
Long-term liabilities
11,200
PPE, net
28,000
Stockholders’ equity
22,400
Total assets
$47,600
Total liabilities and equity
$47,600
Parts a. and b. are independent of each other.
a. Provide...