Balance Sheets for Mergers Assume that the following balance sheets are stated at book value. Construct a postmerger 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 Noncurrent assets 17,000 Non-current liabilities 5,900 Equity 21,000 Total 29,000 Total 29,000 Lhanger plc

£ £

Current 6,400 Current 1,600 assets liabilities Noncurrent 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, compared with 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 postmerger balance sheet, assuming that the acquisition method of accounting is used.