Prepare a pro forma combined balance sheet

Assignment Help Corporate Finance
Reference no: EM13208042

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: EM13208042

Compute an effective annualized interest rate cost for usd

Compute an effective annualized interest rate cost (all-in cost) for the USD tranche of the Eurobond. What information would you need to obtain the dollar all-in cost of t

Analyze and imagine that you will be advising disputes

Choose one to analyze and imagine that you will be advising them. Then, write a briefing paper that you would present to the company's management. Make sure you identify the

Write a review of dividends and investment strategies

Write a review of dividends and investment strategies - explain the key points that the author is trying to communicate. Your review should be at least 1 page and no more tha

What is the net present value of the firms cash flows

What is the Net Present Value of the firm's cash flows over the five-year period? Construct a tornado chart for the analysis in (a). List the relevant parameters in descendi

Determine the npv of the project

If Zircon does not receive the contract, it will have hedged more than it needed to and will offset the excess forward sales by purchasing pesos in the spot market at the ti

Calculate liquidity ratio of firm for prior and current year

Calculate liquidity ratios of the firm for the prior year and current year: current ratio, inventory turnover, and the accounts receivable turnover (for the denominator of t

Bay path cranberry products

Bay Path Cranberry Products is a leading producer of cranberry juice, canned cranberry sauce, fresh berries, and sweetened dried cranberries, with production and processing fa

What are the driving factors of the process undergone

What are the driving factors of the process undergone in the past decade by U.S. corporate boards of directors to strengthen their independence and professional expertise?

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd