D Ltd. and H Corporation are both engaged in the manufacture of computers. On July 1, Year 5, they agree to a merger, whereby D will issue 300,000 shares with a current market value of $9 each for the net assets of H. Summarized balance sheets of the two companies prior to the merger are presented below: Current assets Non-current assets (net) BALANCE SHEET At June 30, Year 5 D Ltd. Carrying Amount $ 450,000 4,950,000 $ 5,400,000 600,000 1,100,000 2,500,000 1,200,000 $ 5,400,000 H Corporation Carrying Fair Amount Value $ 500,000 $ 510,000 3,200,000 3,500,000 $ 3,700,000 $ 800,000 800,000 900,000 920,000 500,000 1,500,000 $ 3,700,000 Current liabilities Long-term debt Common shares Retained earnings In determining the purchase price, the management of D Ltd. noted that H Corporation leases a manufacturing facility under an operating lease that has terms that are favourable relative to market terms. However, the lease agreement explicitly prohibits transfer of the lease (through either sale or sublease). An independent appraiser placed a value of $60,000 on this favourable lease agreement. Required: Prepare the Julv 1. Year 5. balance sheet of D. after the meraer. Required: Prepare the July 1, Year 5, balance sheet of D, after the merger. D Ltd. Balance Sheet July 1, Year 5 Assets 0 Liabilities and Equity $ 0 D Ltd. Balance Sheet July 1, Year 5 Assets Account receivable Common shares Current assets $ 0 Current liabilities Goodwill $ 0 D Ltd. Balance Sheet July 1, Year 5 Assets Goodwill Intangible asset lease contract Long-term debt Non-current assets Retained earnings $ 0 $ 0