Problem:
Consider the following premerger information about firm X and Firm Y;
Firm X Firm Y
Total Earnings $40,000 $15,000
Shares outstanding $20,000 $20,000
Per-share values
Market $49 $18
Book $20 $7
Assume that firm X acquires Firm Y by paying cash for all shares outstanding at a merger premium of $5 per share. Assuming that neither firm has any debt before or after the merger, construct the post merger balance sheet for firm X using the purchase accounting method.