In a split - off transaction, if the subsidiary's book value is $150 million, and the parent company decides to distribute 80% of the subsidiary's book value to the shareholders of the new entity, how much will a shareholder holding 100 shares in the new entity receive in cash? Assume that the company has 1.25 million shares outstanding.
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In a split - off transaction, if the
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- a) The market values of Alpha Corporation and Gamma Corporation are $2,500 and $900, respectively. Assume Alpha acquires Gamma at a cost of $1,000 and the transaction creates $100 in synergy. What would be the NPV of this acquisition to Alpha? b) Principal is acquiring Secondary Companies for $38,000 in cash. Principal has 4,500 shares of stock outstanding at a market price of $31 per share. Secondary has 1,600 shares of stock outstanding at a market price of $22 per share. Neither firm has any debt. The net present value of the acquisition is $2,400. What is the price per share of Principal after the acquisition?Calculate the post-acquisition increase/decrease price of the share if Tim Limited acquires Polo Limited forR45 million. Assume that Tim Limited has 7 million shares with a market price of R7.00 per share and Polo Limitedhas 5 million shares with a market price of R5.00 per share. The synergy of this merger is R11 million.Choose the correct. Aceton Corporation owns 80 percent of the outstanding stock of Voctax, Inc. During the current year, Voctax made $140,000 in sales to Aceton. How does this transfer affect the consolidated statement of cash flows?a. The transaction should be included if payment has been made.b. Only 80 percent of the transfers should be included because the subsidiary made the sales.c. Because the transfers were from a subsidiary organization, the cash flows are reported as investing activities.d. Because of the intra-entity nature of the transfers, the amount is not reported in the consolidated cash flow statement.
- Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 1,800 shares of stock outstanding at a market price of $40 a share. Firm B has 1,200 shares outstanding at a price of $47 a share. What is the value per share of the merged firm?B) Intem Co acquired 16 million ordinary shares in Vallay for RM 56 million. The issued share capital of Vallay comprised 100 million ordinary shares. Intem Co also has share options that gives it the right to acquire another 12 million ordinary shares in Vallay. If Intem Co exercises its rights, the enlarged share capital of Vallay will be 112 million shares. Discuss the accounting treatment of the Vallay's investment in the financial statement of Intern Co and its consolidated financial statements.SCENARIO: AMO Limited purchases shares of BEMI Limited by investing 1,000,000.00 ZMW. The dividend received on these shares reflects in the profit and loss account of the company. Further, the workers of the company receive an annual bonus and the dividend amount is taken into account in calculating the overall bonus figure.A few years later, AMO Limited transfers the shares of BEMI Limited to CUMI Limited, which is a wholly owned subsidiary of AMOLimited. Post transferring of the shares, the dividends do not reflect in the accounts of AMO Limited. This leads to a reduction in the overall bonus amount figure. Is AMO Limited legally allowed to do so? Which legal theory needs to be mentioned here?
- Consider the following premerger information about Firm X and Firm Y: Firm X $ 40,000 20,000 Total earnings Shares outstanding Per-share values: Market Book $49 $ 20 Firm Y $15,000 20,000 Total asset of the combined company $18 $7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger? Total assets XY Total equity XY = $880,000 Total assets XY = Total equity XY = $760,000 Total assets XY = Total equity XY = $1,240,000 Total assets XY = Total equity XY = $853,600 Total assets XY = Total equity XY = $924,000 =What is the goodwill arising from the consolidation, if the 100,000, P50 par value shares of the subsidiary are currently selling at 90/share?Honesty Company started negotiating for the acquisition of Integnity Company. The offer was for shareholders of Integrity to receive one Honesty share with a market value of P125 for every four shares held in exchange for all assets of Integrity (except shares in listed companies). In addition to the shares, Honesty will transfer its shares in listed companies which has a fair market value of P750,000. Honesty will also pay integrity sufficient cash to enable Integrity to pay all its creditors then Integrity will liquidate. The shareholders of Integrity accepted the offer. The Balance Sheet on December 31, 2020 is given below (see image below). The net assets of Integrity are reflected at their fair values except for the following: Inventory, P1,300,000 fair market value Land and building, P4,000,000 fair market value Shares in listed companies, P900,000 fair market value How much is the total assets of Honesty after the merger? Honesty 7,250,000 1,700,000 2,800,000 800,000 3,500,000…
- Par Company acquires 100% of the common stock of Sub Company for an agreedupon price of $900,000. The book value of the net assets is $700,000, which includes $50,000 of subsidiary cash equivalents. Existing fixed assets have fair values greater than their recorded book values. How will this transaction affect the cash flow statement of the consolidated firm in the period of the purchase, if:a. Par Company pays $900,000 cash to purchase the stock?b. Par Company pays $500,000 cash and signs 5-year notes for $400,000? All Sub Company shareholders receive notes.c. Par Company exchanges only common stock with the shareholders of Sub Company?Bartlies Co is considering whether to acquire Indigo Inc. The values of the two companies as separate entities are $28 million and $14 million, respectively, Bartlies Co estimates that by combining the two companies, it will reduce costs by $540.000 per year in perpetuity. Bartlies considers offering Indigo Inc's shareholders a 50% holding in Bartlies Co. The opportunity cost of capital is 10%. a. What is the value of the stock in the merged company held by the original Indigo Inc's shareholders? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Value of the stock million 00-42:24 b. What is the cost of the stock alternative? (Do not round intermediate calculations).If Alakdan Co., a new company would acquire the net assets of Cardo and Allana Company by issuing 50,000 shares of P25 par value ordinary shares with fair value of P130 per share and paying professional finders fee and stock registration costs of P125,000 and P65,000, respectively, determine:i. The total amount of Goodwill to be reported by Alakdan Co.ii. The total assets of Alakdan Co. after the business combination.iii. The total stockholders equity of Aklan Co after the business combination.iv. The journal entries to be made by Alakdan Co. for the business combination.