Analyze the impacts of each of the options as acquisitions

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Reference no: EM133008346

MHLV a luxury product company, is interested in possibly acquiring an interest in Chrior, another luxury consumer goods company. The CFO of MHLV has been in negotiations and has presented you- the accountant- with three options that have been proposed. The CFO would like to know what the impacts would be for each of the potential acquisition options. The CFO would like a memo analyzing your opinion on the possible reporting implications of each of the options.

MHLV is a company and is considering one of the following options in order to acquire Chrior another company.

1. Buy all of the net assets of Chrior for $500 million.
2. Buy 100% of the shares of Chrior for $400 million
3. Buy 50% of the shares for $150 million and buy 10,000 convertible securities for $300 million. Maximum 10,000 shares could be issued.

Presently, Chrior has 5,000 shares outstanding and the net assets of Chrior have a book value of $350 million. The 5,000 shares are owned by one shareholder.

Problem 1:
You are required to analyze the impacts of each of the options as acquisitions and their effect on the financial reporting of MHLV.

Reference no: EM133008346

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