G Company is considering the takeover of K Company whereby it will issue 6,900 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 17,000 shares outstanding, which were trading at $8.40 per share. The following information has been assembled:

G Company K Company

Carrying

Amount Fair Value Carrying

Amount Fair Value

Current assets $ 54,500 $ 52,000 $ 19,000 $ 13,700

Plant assets (net) 69,000 79,000 29,000 44,000

$ 123,500 $ 48,000

Current liabilities $ 20,900 20,900 $ 5,900 5,900

Long-term debt 19,500 23,500 3,400 5,100

Common shares 49,000 19,000

Retained earnings 34,100 19,700

$ 123,500 $ 48,000

Required:

(a)Prepare G Company's consolidated balance sheet immediately after the combination using the direct approach and accounting for the combination with

(i) The acquisition method

(ii) The new-entity method

(b)Calculate the current ratio and debt-to-equity ratio for G Company under both methods.(Round your answers to 2 decimal places.)

New Entity

Method Acquisition

Method

Current ratio

Debt-to-equity ratio

(c)Prepare G Company's consolidated balance sheet immediately after the combination using the worksheet approach and the acquisition method.(Leave no cells blank - be certain to enter "0" wherever required. Values in the first two columns and last column (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Entry" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Omit $ sign in your response.)

Consolidated Financial Statement Working Paper

G Company

Consolidated Balance Sheet

Entries

G Company K Company Dr. Cr. Consolidated

Current assets $ $ $ $ $

Plant assets (net)

Goodwill

Investment in K Company

Acquisition differential

$ $ $

Current liabilities $ $ $

Long-term debt

Common shares

Retained earnings

$ $ $

Total $ $