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Longhorn Case Essay

440 words - 2 pages

What can I say, I tried! My answers may be wrong, but this is what I came up with:
1.) Acquisition of Noles 74.25M
C.S. 74.25M
(5.5 M shares at $13.50)

2.) Combining Noles’ projected net income with Longhorn’s net income and considering Longhorn still
has 5M shares of outstanding stock, EPS would be : 51M/51M= $1.00

3.) Bargain purchase gain is the acquisition of a corporate entity for a price that is less than the fair value
of the acquired entities net assets

4.) My balance for A/R came up to 4.162M:

4.522M | 250K (allowance for doubtful accounts) |
| 110K ...view middle of the document...

80*34000=27200 | (8000)= 0.20400000.20*34000=6800 | |
| | | |
In the above table:
14,000= cost of building (11000) and equipment (3000) in Hamilton, OH
40,000= cost of building (32000) and equipment (8000) in Ashville, NC
The 10,000 and 34,000 are the given selling prices
I could be wrong in what I did to calculate depreciation but this is what I did to calculate it:

| BuildingDepreciation | Equipment depreciation | Total |
| | | |
Hamilton, OH | (11000-7900)= 77.5 | (3000-2100)=180 | 257.5 |
| 40 | 5 | |
| | | |
| | | |
Ashville, NC | (32000-27200)= 4800 | (8000-6800)= 240 | 5,040 |
| 40 | | |
| | | 5297.5 |

So, on Noles’ consolidated balance sheet I replaced the $45,100 Buildings and equipment amount with $54,000. And, I added the$ 5,297.5 depreciation from above to the “Less accumulated depreciation.” The result was a “Less accumulated depreciation” amount of $19,622.5. I also added to cash the $140,000 received for Landslide A/R, and subtracted $110,000 from A/R. The total of these adjustments gave me $21,976 for total current assets and $34,377.5 (54,000-19,622.5) for “Net buildings and equipment.”
I’m not sure of the answers for questions 4 and 5, but I took a shot at number 5 by adding the patent ($20,000) to the total assets. This gave me $76.353. Thus, if Longhorn only paid 74.25M for Noles, then the amount paid is less than the net assets acquired (76.353). A bargain purchase gain might result in this situation from this excess of net assets over the purchase price.

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