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Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,300. Jurion pays
Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,300. Jurion pays $17,200 for James and raises the needed funds through an issue of long-term debt.
Jurion Co. | |||||||
Current assets | $ | 12,750 | Current liabilities | $ | 5,700 | ||
Net fixed assets | 37,500 | Long-term debt | 10,300 | ||||
Equity | 34,250 | ||||||
Total | $ | 50,250 | Total | $ | 50,250 | ||
James, Inc. | |||||||
Current assets | $ | 3,700 | Current liabilities | $ | 1,700 | ||
Net fixed assets | 7,200 | Long-term debt | 2,200 | ||||
Equity | 7,000 | ||||||
Total | $ | 10,900 | Total | $ | 10,900 | ||
Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations.)
Jurion Co., post-merger | |||||||
Current assets | $ | Current liabilities | $ | ||||
Fixed assets | Long-term debt | ||||||
Goodwill | Equity | ||||||
Total | $ | Total | $ | ||||
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