Acquisition accounting
Hi guys,
Apologies for spamming the forums recently with all my piled up queries about finance.
I would like to understand the merger/acquisition accounting. Consider the following example of two independent companies, A and B (All figures in $, for simplicity)
Comp A: Total Balance sheet size of 200
Equity: 50
Liabilities: 150
Fixed Asset: 20
Current Asset: 180 (including cash)
Comp B: Total Balance sheet size of 100
Equity: 75
Liabilities: 25
Fixed Asset: 20
Current Asset: 80 (including cash)
Company A acquires 100% of Company B, company B becomes a wholly owned subsidiary of A, through:
i. $100 paid to stakeholders (secondary transaction), and
ii. $50 money invested in the company for future capital needs (primary transaction)
Post this acquisition, How will Company A's standalone and consolidated Balance Sheet look like?
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