EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
11th Edition
ISBN: 8220102798878
Author: Ross
Publisher: YUZU
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Chapter 29, Problem 4QP
Summary Introduction

To prepare: The post merger balance sheet of enterprise S by using the purchase accounting method.

Merger:

Merger is the combination of two entities into one in which the shareholders of both companies merge their resources into a new company.

Purchase Accounting Method for Mergers:

In the purchase accounting method, the assets of the targeted company has to be recorded into 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 the purchase price.

Balance Sheet:

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

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