Corporate Finance (The Mcgraw-hill/Irwin Series in Finance  Insurance  and Real Estate)
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Chapter 29, Problem 3QP
Summary Introduction

To prepare: The post merger balance sheet of company Ju by using purchase accounting method.

Merger:

Merger occurs when the shareholders of two or more companies pool the resources of their company into one separate legal entity and as a result, a new company comes into existence. Merger is basically the result of merging two or more companies into one.

Purchase Accounting Method for Mergers:

In the purchase accounting method, the assets of the targeted company has to be recorded at the current market value in the books of the acquiring company and goodwill assets account has to be created. Goodwill is the difference of current market value and purchase price.

Balance Sheet:

Balance sheet is the summarized statement of total assets and total liabilities of a company in an accounting period. It is one of the financial statements.

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