What is the book value of the net assets

Assignment Help Accounting Basics

Reference no: EM132846977

Question 1 - Company A issues 250 shares of its common stock for all of the outstanding common shares of Company B. After the transaction, the board of directors and senior management of Company A will comprise an equal number of representatives of former Company A and former Company B. Each company has fewer than 20 individual shareholders before the transaction. Here is some pre-transaction information for the two companies: Company A Company B # shares of common stock outstanding company A150 and company B 800

Book Value of net assets company A $100,000 and company $100,000 Fair value of entity company A $300,000 and Company B $500,000

Required -

1. Under FASB ASC 805, which company is the acquiring entity? Why?

2. What is the book value of the net assets of the combined businesses after the transaction is accounted for according to FASB ASC 805?

Question 2 - Company X issues its common stock to the stockholders of Company Z in exchange for all of the outstanding common stock of Company Z. The original stockholders of Company X will have 51% of the voting interests of the combined entity (there are no other equity instruments outstanding at Company X or Z). Some additional facts: The Board of Directors will consist of 5 directors from Company Z and 4 from Company X, all with 5-year terms. A two-thirds vote of the ownership interests is required for the removal of Board members. Senior management will consist of one member from Company X (Chairman) and two members from Company Z (CEO and CFO). ? All other relevant factors to consider in the transaction are neutral (i.e., they do not favor either party as the accounting acquirer).

Required -

1. Which company is the accounting acquirer and why?

2. This question is independent from #1. Assume the original facts plus this additional fact: One preexisting Company X shareholder owns 30% of the outstanding shares of the combined entity. This shareholder was given veto rights over the composition of the combined entity's Board of Directors. Which company is the accounting acquirer and why?

Reference no: EM132846977

Questions Cloud

Did the reform have a lasting effect : what circumstances prompted this specific reform and what effects this reform had after it was implemented. Did the reform have a lasting effect?

Was anything new about way american thinking about society : What debates and concerns are a continuation from the previous chapter(s)? What issue do you think is the most concerning and why?

Identify and explain the assertions at risk : Michael Ltd is currently auditing the financial report of Jackson Ltd for the year ending 30 June 2021. Identify and explain assertions at risk in the scenario

How events like the war and exploration towards the west : Explain how events like the War of 1812 and exploration towards the West by the United States may have impacted the sense?

What is the book value of the net assets : What is the book value of the net assets of the combined businesses after the transaction is accounted for according to FASB ASC 805

What in view is important policy issue facing united states : What in your view is the most important policy issue facing the United States? Why is it important and which specific problems need to be solved?

How second industrial revolution influenced american politic : How the Second Industrial Revolution influenced American politics in significant ways during the late nineteenth and early twentieth centuries.

What the total cost of this merchandise : The company returned $340 worth of merchandise and then paid the invoice within the 1% cash discount period. The total cost of this merchandise is

Explain the concept of judicial review : Explain the concept of Judicial Review and how this power of the Judicial branch is unique. Give concrete examples of Judicial Review in history.

User Account

All Pages