24 Balance Sheets for Mergers Assume that the following balance sheets are stated at book value.

Construct a post-merger balance sheet assuming that Reflection plc purchases Lhanger plc, and both sets of accounts are presented according to International Financial Reporting Standards.

REFLECTION plc

(£) (£)

Current assets 12,000 Current liabilities 2,100 Non-current assets 17,000 Non-current liabilities 5,900 Equity 21,000 Total 29,000 Total 29,000 LHANGER plc (£) (£)
Current assets 6,400 Current liabilities 1,600 Non-current assets 2,600 Non-current liabilities 2,900 Equity 4,500 Total 9,000 Total 9,000 The fair market value of Lhanger’s non-current assets is £10,000 versus the £2,600 book value shown.
Reflection pays £18,000 for Lhanger and raises the needed funds through an issue of long-term debt.
Construct the post-merger balance sheet.