A question about the share swaps

A question about the share swaps

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I'm a PhD student in Brunel University, with a question about the share swaps while I’m trying to make a financial model to test the M&A deals.

The question is: If bidder uses its own existing shares to pay for the target without cash consideration, what kind of accounting treatment should apply? For example, firm A is trying to acquire 80% of the equity in firm B, with 1 share of A for 2 shares in B. The market price of each A’s share is £10, while the market price of B is £5. A has got 2000 shares, while B only has got 500 shares. The face value of each A & B share is £1.

After the share swaps, what the accounts should be? Will the goodwill be generated from the share swaps? (My understanding is no.) And is any transaction occurred in the account of investment? I've browsed many materials to find the answer. However, none of them can give me a clear answer.
Liang Zhang

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