Advanced accounting

12. necessaries acquired Blue Corporation on August 371, 20X6. Both corporations have scal years ending on August 31. Exhibit 3. 9 shows the SFP for each corporation as of August 31, 20X6, immediately prior to the combination, and net income amounts for each corporation for the scal year ended August 31, 20X6. The fair values of the assets and liabilities of the two companies at the date of acquisition. The deferred development costs represent the unamortized balance of the development costs of the companies' leading-edge products. There is no observable market value for this identiable intangible asset, but Ace expects to fully recover the costs in xture years. Before the combination, Ace had 1,200,000 common shares issued and outstanding. Blue had 750,000 common shares issued and outstanding. Required Prepare the Ace Corporation post-combination SFP(statement of nancial position) under each of the following independent situations: a. Ace Corporation purchased the assets and assumed the liabilities of Blue Corporation by paying $2,000,000 cash and issuing long-term instalment notes payable of $18,000,000 Pro-Combination Statements of Financial Position, August 31, 20X6 Ace Blue Cash and cash equivalents 3 2,350,000 5 1,200,000 Accounts receivable 2,000,000 1,800,000 Land 5,000,000 Machinery and equipment (net) 13,500,000 8,400,000 Deferred development costs 600,900 1.1mm mL MM Accounts payable $ 650,000 5 1,100,000 Notes payable, long-term 2,000,000 1,000,000 Common shares 15,000,000 6,950,000 Retained earnings 5,809,133} 5,510,900 ML EMM Net income, year ended August 31, 20X6 $ 2 450 000 5