Question
Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms: Silver Enterprises
Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms: |
Silver Enterprises | |||||||
Current assets | $ | 6,400 | Current liabilities | $ | 4,400 | ||
Other assets | 2,800 | Long-term debt | 9,100 | ||||
Net fixed assets | 31,300 | Equity | 27,000 | ||||
Total | $ | 40,500 | Total | $ | 40,500 | ||
All Gold Mining | |||||||
Current assets | $ | 2,900 | Current liabilities | $ | 1,670 | ||
Other assets | 830 | Long-term debt | 0 | ||||
Net fixed assets | 13,200 | Equity | 15,260 | ||||
Total | $ | 16,930 | Total | $ | 16,930 | ||
Construct the balance sheet for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The market value of All Gold Mining's fixed assets is $14,450; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $21,000 in new long-term dept to finance the acquisition. |
Silver Enterprises, post-merger | |||||
Current assets | $ | Current liabilities | $ | ||
Other assets | Long-term debt | ||||
Net fixed assets | Equity | ||||
Goodwill | |||||
Total | $ | Total | $ | ||
rev: 04_27_2016_QC_CS-48977
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