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Discussion

The PEN Corporation with a book value of $20 million and a market value of $30 million has merged with the CNC Corporation with a book value of $6 million and a market value of $8 million at a price of $9 million. If the transaction is a purchase then the total assets on the books of the new company will be:

  • A.$38 million
  • B.$39 million
  • C.$29 million
  • D.$26 million

Answer: B

Purchase method: 30 + 8 + 1 = 39

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