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Hello tutor Using fair value accounting for goodwill under FAS 141R Case Talmadge Company is acquiring the target Tyler, Inc in a merger. Tyler's...

Hello tutor
Using fair value accounting for goodwill under FAS 141R
Case
Talmadge Company is acquiring the target Tyler, Inc in a merger. Tyler’s market valuation is $6.0 bln , and its equity value on the balance sheet before any adjustments is 3.0 bln. During the merger process, Tyler’s inventories will be written down by $200 mln, and its receivables will be written down by $300mln. On the other hand, under fair value accounting, its plant and equipment will increase in value by $700 mln, and its patents and trademarke will increase in value by $300 mln.

Question: What is the new equity value of Tyler on its Balance sheet?
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Accounting - 8369233.xls

SOLUTION:
New Equity Value:
Particulars
Value before adjustment
Inventories
Receivables
Plant & Equipment
Patents & Trademarks
New Equity Value Amount
$3.00
$(0.20)
$(0.30)
$0.70
$0.30
$3.50

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