What is the new equity value of tyler on its balance sheet

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Reference no: EM13295031

Using fair value accounting for goodwill, under FAS 141R, determine the amount of goodwill that "the acquiring company" enters on its balance sheet in the following situation:

Talmadge Corporation is acquiring the target Tyler, Inc. in a merger. Both companies are publicly listed. Tyler's market valuation in the merger is $6.0 billion, and its equity value on its balance sheet before any adjustments is $3.0 billion. During the merger process, Tyler's inventories will be written down by $200 million, and its receivables will be written down by $300 million. On the other hand, under fair value accounting, its plant and equipment will increase in value by $700 million, and its patents and trademarks will increase in value by $300 million.

A) What is the new equity value of Tyler on its balance sheet?
B) How much goodwill will Talmadge enter on its balance sheet as a result of this merger?
C) If the prevailing market value of Tyler was $5.0 billion on the NASDAQ during the three months before the merger announcement, what is the premium over market value that Talmadge paid for Tyler in dollars and percent?

 

Reference no: EM13295031

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