Fair value accounting for goodwill.

Reference no: EM13300039

fair value accounting for goodwill. Under FAS141R, determine the amount of Goodwill that "the acquiring company" enters on its balance sheet in the following situation:

Acquiring Corporation is acquiring the Target Company, Inc. in a merger. Both companies are publicly listed. Target's market valuation in the merger is $10.0 billion, and its equity value on its balance sheet before any adjustments is $6.5 billion. During the merger process, Target's inventories will be written down by $500 million, and its receivables will be written down by $400 million. On the other hand, under fair value accounting, its plant and equipment will increase in value by $1.1 billion. Its patents and trademarks, however, will decrease in value by $400 million.

A) What is the new equity value of Target on its balance sheet?

B) How much goodwill will Acquiring Company enter on its balance sheet as a result of this merger?

C) If the prevailing market value of Target was $7.0 billion on the NASDAQ before the merger announcement, what is the premium over market value that Acquiring Co paid for Target in dollars?

D) and percent?

You may encounter a similar problem on the Midterm Exam.

Reference no: EM13300039

Questions Cloud

Which hedging technique would you choose : Structure a synthetic forward that would hedge your exposure. What is the effective $/Euro rate that you lock in?

Prepare a financial analysis : Prepare a financial analysis report comparing 2 publicly traded corporations.

Calcluate the impulse exerted on the clay ball : The super ball is not replaced by a clay ball the same size and mass. The ball is dropped from the same height and it sticks to the table. Calcluate the impulse exerted on the clay ball

How to calculate the asphalt content by weight of mix : The VMA of a mixture is 15.0% and the air voids are 4.0%.If the aggregate has a specific gravity (bulk dry) of 2.700 g/cm3 and percent binder absorbed (by the mass of aggregate) is 0.5%, calculate the asphalt content by weight of mix.

Fair value accounting for goodwill. : Fair value accounting for goodwill. Under FAS141R, determine the amount of Goodwill that "the acquiring company" enters on its balance sheet in the following situation:

Climbing ropes are best suited to develop : Which of the following is an example of a return activity? Climbing ropes are best suited to develop:

What impulse does the head butter produce : A head-butter can accelerate himself from rest to head-butting speed of 8.5 m/s, At the moment of impact, what impulse does the head butter produce

Determine what is the air void content of core 2 of mixture : An asphalt mixture is placed and compacted. Two tests are taken from the compacted mixture and checked for density. Core 1 had a density of 2403 kg/m3 and an air void content of 6.5%. Core 2 had a density of 2419 kg/m3.

Determine at what frequency do you year the siren : You are driving north on 107th Avenue at a speed of 28.7 mph. At what frequency do you year the siren

User Account

All Pages