Reference no: EM131765481

Acquiring company buys 100% of Target Companies equity for $5 million in cash. As an analyst, you are given the preserver balance sheet for the two companies. Assuming plant and equipment are revalued upward by $500,000, what will be the combined companies' shareholders' equity plus total liabilities? What is the difference between Acquiring Company's shareholders' equity and the shareholders' equity of the combined companies? 

Please show your work.

Pre-merger balance sheets for above companies 

Acquiring Company    Target Company

Current Assets  600,000  800,000

Plant & Equipment 1,200,000 1,500,000

Total Assets 1,800,000 2,300,000

Long-term Debt  500,000  300,000

Shareholders' Equity 1,300,000 2,000,000

Shareholders' equity +

Total Liabilities 1,800,000 2,300,000