If the acquisition is completed as of 12/31/06, what will the book value per share be for the year ended 12/31/06 assuming pooling- of-interest accounting is used?

Question

Quizplus · Accepted Answer

When using pooling-of-interest accounting, the book value per share is calculated by taking the combined book value of the two companies and dividing it by the total number of shares outstanding after the merger.

Assuming pooling-of-interest accounting is used, we can calculate the book value per share as follows:

Book value of Company A = $8 million 
Book value of Company B = $12 million

Total book value of both companies = $20 million

Total shares outstanding after the merger = 1 million

Book value per share = Total book value / Total shares outstanding 
Book value per share = $20 million / 1 million 
Book value per share = $20.00

Therefore, the book value per share for the year ended 12/31/06, assuming pooling-of-interest accounting is used, will be $20.00.

If the Acquisition Is Completed as of 12/31/06, What Will