How can land and/or real estate from two different companies be valued and “combined” on a consolidated balance sheet?

The real estate of the acquired entity should be valued at fair market value. Each tract of real estate is typically valued separately but in connection with any surrounding tracts commonly owned by the same entity.

What are some valuation issues to consider when combining the land and/or real estate of two companies?

It is possible for the value of two adjoining properties to increase as a result of having common ownership. A change in the expected use of a specific piece of real estate may impair the value of that real estate, especially if the property is to be sold after being acquired and the future use of the property would require some modification or remedial efforts. Conversely, land associated with a profitable manufacturing operation may be worth more than equivalent value land, especially when it is in full use. Finally, any postmerger change in land zoning should be explained with reference to the stated values of the acquirer.[i]