Osicom Tech Is Acquiring Rexon's Outstanding Common Stock for $32

question 46

Multiple Choice

Osicom Tech is acquiring Rexon's outstanding common stock for $32 million. Before acquisition financial information on these two firms is given as follows (in $ millions) : $$\begin{array} { l r r } & \text { Osicom Tech } & \text { Rexon } \\\text { Total assets } & \$ 120 & \$ 50 \\\text { Liabilities } & 60 & 25 \\\text { Stockholders' equity } & 60 & 25\end{array}$$ ? What are the total assets and stockholders' equity (in $ millions) if the purchase method is used as the accounting method for this merger?

• A) $170; $85
• B) $177; $92
• C) $170; $92
• D) $85; $92

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Definitions:

Stock Split

A measure taken by a company to split its current shares into numerous ones, aiming to increase the shares' liquidity.

Par Value

The nominal or face value of a stock or bond, representing the minimum amount the security is stated to be worth.

Common Stock Account

An equity account on a company's balance sheet representing the total amount of money invested by common stockholders plus the retained earnings of the company.

Common Stock Dividend

A portion of a company's earnings distributed to common shareholders, typically in the form of cash or additional shares.