Calculate Gain from acquisition.

CA Final · Advanced Financial Management · RTP · May 2026
Calculate Gain from acquisition.

Suggested Answer and Working Notes:

(iii) Calculation of gain from acquisition: Total Earnings of Long Ltd. (12x 30,00,000) 3,60,00,000 Total Earnings of Tall Ltd. (₹ 5 × 18,00,000) 90,00,000 Combined Earnings 4,50,00,000 PE Ratio of Long Ltd. (180/12) 15 Value of Long Ltd. after acquisition 67,50,00,000 Less: Value of two companies separately Long Ltd. (180x 30,00,000) 54,00,00,000 Tall Ltd. (50x 18,00,000) 9,00,00,000 63,00,00,000 Gain from Acquisition 4,50,00,000

Topics: Mergers, Acquisitions and Corporate Restructuring

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