Advanced Accounting

After the merger The new balance sheet should be followed the book value not the fair value

please follow IFRS in calculations

Question 2: Prepare balance sheet after an acquisition: (CLO #2 & 3) (5 marks) On January 2, 2011, Pet Corporation enters into a business combination with Sea Corporation in which Sea is dissolved. Pet pays $1,650,000 for Sea, the consideration consisting of 66,000 shares of Pet $10 par common stock with a market value of $25 per share. In addition, Pet pays the following expenses in cash at the time of the merger: Finders' fee $ 70,000 Accounting and legal fees $130,000 Registration and issuance costs of securities $80,000 Total: $280,000 Balance sheet and fair value information for the two companies on December 31, 2010, immediately before the merger, is as follows (in thousands): Pet Book Value Sea Book Value Sea Fair Value Cash S 300 $ 60 $ 60 Accounts receivable-net 460 100 80 Inventories 1,040 160 240 Land 800 200 300 Buildings-net 2,000 400 600 Equipment-net 600 500 Total assets S1,520 $1,780 Accounts payable $ 600 5 80 S 80 Note payable 1,200 400 360 Capital stock $10 par 1,600 Other paid-in capital 1,200 100 Retained earnings 1.000 340 Total liabilities and owners' equity $5,600 $1,520 1.000 $5,600 600 REQUIRED: Prepare a balance sheet for Pet Corporation as of January 2, 2011, immediately after the merger, assuming the merger is treated as an acquisition