Your supervisor asks you to analyze the potential purchase

Reference no: EM13381537

Your supervisor asks you to analyze the potential purchase of Drew Company by your firm, Pierson, Inc. You are provided the following information (in million):

Pierson,Inc. Drew COMPANY

Historical Historical Fair

Cost Based Cost Based Value

Current Assets $70 $60 $65

Land 60 10 10

Buildings, net 80 40 50

Equipment, net 90 20 40

Total Assets $300 $130 $165

Current Liabilities $120 $20 $20

Shareholders' equity 180 110 -----

Total liabilities and equity $300 $130

Required:

a. Prepare a pro forma combined balance sheet using purchase accounting. Note that Pierson pays $180 million in cash for Drew where the cash is obtained by using long term debt.

b. Discuss how differences between pooling and purchase accounting for acquisitions affect future reported earnings if the Pierson/Drew business combination.

Reference no: EM13381537

Questions Cloud

The budget committee for planning upcs expansion project : the budget committee for planning upcs expansion project has been deliberating on the viability of the project for

The firm manufactures a global positioning system gps that : the firm manufactures a global positioning system gps that sells for 2000 with cost of goods sold hardware 30 and

Ace companys net income for the year 4 million and the : ace companys net income for the year 4 million and the number of common shares outstanding is 3 million there is no

Campbell soup companyrequireda estimate the amount of : campbell soup companyrequireda. estimate the amount of depreciation expense reported on campbells tax returns for each

Your supervisor asks you to analyze the potential purchase : your supervisor asks you to analyze the potential purchase of drew company by your firm pierson inc. you are provided

Spellman company acquires 90 of moore company in a business : spellman company acquires 90 of moore company in a business combination. the total consideration is agreed upon but the

Exotic cuisines employee stock optionsas a newly minted mba : exotic cuisines employee stock optionsas a newly minted mba youve taken a management position with exotic cuisines inc.

1the eurusd spot exchange rate is quoted as 132250-132267 : 1.the eurusd spot exchange rate is quoted as 1.32250-1.32267. how many eur are needed to purchase 100000000 usd on this

1 the eurusd spot exchange rate is quoted as 132250-132267 : 1. the eurusd spot exchange rate is quoted as 1.32250-1.32267. how many eur are needed to purchase 100000000 usd on

User Account

All Pages