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    Marriott Corporation split into two companies: Host Marriott

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    BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation
    and Marriott International. Host Marriott retained ownership of the corporation's vast
    hotel and other properties, while Marriott International, rather than owning hotels,
    managed them. The purpose of this split was to free Marriott International from the
    "baggage" associated with Host Marriott, thus allowing it to be more aggressive in its
    pursuit of growth. The following information (in millions) is provided for each
    corporation for their first full year operating as independent companies.

    Host Marriott Marriott International
    Sales $1,501 $8,415
    Net income (25) 200
    Total assets 3,822 3,207
    Total liabilities 3,112 2,440
    Stockholders' equity 710 767

    Instructions

    (a) The two companies were split by the issuance of shares of Marriott International to all shareholders of the previous combined company. Discuss the nature of this transaction.

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    INTERPRETING FINANCIAL STATEMENTS

    BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation
    and Marriott International. Host Marriott retained ownership of the corporation's vast
    hotel and other properties, while Marriott International, rather than owning hotels,
    managed them. The purpose of this split was to free Marriott International from the
    "baggage" associated with Host Marriott, thus ...

    Solution Summary

    Marriott Corporation split into two companies: Host Marriott Corporation
    and Marriott International. Host Marriott retained ownership of the corporation's vast
    hotel and other properties, while Marriott International, rather than owning hotels,
    managed them. The purpose of this split was to free Marriott International from the
    "baggage" associated with Host Marriott, thus allowing it to be more aggressive in its
    pursuit of growth. The following information (in millions) is provided for each
    corporation for their first full year operating as independent companies.

    Host Marriott Marriott International
    Sales $1,501 $8,415
    Net income (25) 200
    Total assets 3,822 3,207
    Total liabilities 3,112 2,440
    Stockholders' equity 710 767

    Instructions

    (a) The two companies were split by the issuance of shares of Marriott International to all shareholders of the previous combined company. Discuss the nature of this transaction.

    $2.19

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