Estimating the cost of acquisition, Accounting Basics

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Estimating the cost of acquisition

Response to the following problem:

In July 2007, Newscorp entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company for $60 per share. The number of outstanding shares at the time of the announcement was 82 million. The book value of interest-bearing liabilities on the balance sheet of Dow Jones was $1.46 billion. Estimate the cost of this acquisition to the shareholders of Newscorp.

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Accounting Basics: Estimating the cost of acquisition

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