On July 1, 20X2, Alan Enterprises merged with Cherry Corporation through an exch
ID: 2419613 • Letter: O
Question
On July 1, 20X2, Alan Enterprises merged with Cherry Corporation through an exchange of stock and the subsequent liquidation of Cherry. Alan issued 206,000 shares of its stock to effect the combination. The book values of Cherry's assets and liabilities were equal to their fair values at the date of combination, and the value of the shares exchanged was equal to Cherry's book value. Information relating to income for the companies is as follows:
Compute the net income and earnings-per-share amounts that would be reported in Alan's 20X2 comparative income statements for both 20X2 and 20X1. (Round earnings per share to 2 decimal places.)
On July 1, 20X2, Alan Enterprises merged with Cherry Corporation through an exchange of stock and the subsequent liquidation of Cherry. Alan issued 206,000 shares of its stock to effect the combination. The book values of Cherry's assets and liabilities were equal to their fair values at the date of combination, and the value of the shares exchanged was equal to Cherry's book value. Information relating to income for the companies is as follows:
Explanation / Answer
2011 2012 INet ncome Allan 4610000 6158000 Cherry coporation 1320000 802000 Combined net income 5930000 6960000 No. of shares outstanding 1030000 1030000 EPS 5.76 6.76
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