Absorption (a) and Quasi-Merger (b) Acquisition (c and d) Calculation IV – CIIA Final

Companies ACO and BCO are set to merge. ACO will buy BCO by exchanging 10 own shares for 1 BCO share. Balance sheets:

[table]
Description,ACO,BCO
Current Assets,120,60
Other Assets,380,140
TOTAL ASSETS,500,200
Liabilities,300,110
Common Stock,160,80
Retained Earnings,40,10
- Notes -
# shares,8000,400
par value,20,200
[/table]

Exchange ratio: 10 ACO shares for 1 BCO share
[table]a) Show the balance sheet of ACO after absorption
Current Assets,180
Other Assets,520
TOTAL ASSETS,700
Liabilities,410
TOTAL LIABILITIES,410
Common Stock,240
Retained earnings,40
Additional paid-in capital,10
EQUITY,290
[/table]
[table]b) Show the balance sheet of ACO after quasi-merger
Current Assets,120
Other Assets,380
Holding in BCO,90
TOTAL ASSETS,590
Liabilities,300
TOTAL LIABILITIES,300
Common Stock,240
Retained earnings,40
Additional paid-in capital,10
EQUITY,290
[/table]
Note: The liabilities of BCO can't be seen in this case!
[table]c) Show the balance sheet of ACO after acquisition
Current Assets,10
Other Assets,380
Holding in BCO,110
TOTAL ASSETS,500
Liabilities,300
TOTAL LIABILITIES,300
Common Stock,160
Retained earnings,40
EQUITY,200
[/table]
[table]d) Show the balance sheet of GROUP (!) ACO after acquisition
Current Assets,10
Other Assets,380
Holding in BCO,90
Goodwill,20
TOTAL ASSETS,500
Liabilities,410
TOTAL LIABILITIES,410
Common Stock,160
Retained earnings,40
EQUITY,200
[/table]
 

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