The ABC Company will issue shares of P 20 par value common stock for all the assets and liabilities of XYZ Company. ABC Company’s common stock has a current price of P 40 per share. The fair market value of the current assets of XYZ is P 800,000, while that of the PPE is P 3,200,000. The liabilities are 600,000. To have a gain from acquisition of P200,000 the amount of shares to be issued by ABC Company should be : 75,000 74,000 85,000 80,000

The ABC Company will issue shares of P 20 par value common stock for all the assets and liabilities of XYZ Company. ABC Company’s common stock has a current price of P 40 per share. The fair market value of the current assets of XYZ is P 800,000, while that of the PPE is P 3,200,000. The liabilities are 600,000. To have a gain from acquisition of P200,000 the amount of shares to be issued by ABC Company should be : 75,000 74,000 85,000 80,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 12P

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The LL Company will issue shares of P10 par value common stock for all the assets and liabilities of the OO Company. LL Company’s common stock has a current market value of P40 per share. The OO Company’s net assets were as follows: Current Assets 1,280,000 Non-Current Assets 3,520,000 Liabilities                                                            1,600,000 The fair market value of the current assets is P1,600,000 while that of the non-current assets is 6,400,000. All of the liabilities are correctly stated. LL Company issued sufficient shares of stock so that the fair market value of the stock is equal the fair market value of OO Company’s net assets. To have an income from acquisition of P400,000, the number of shares to be issued by LL should be?
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