Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 | $ | 5,800 | Current liabilities | $ | 3,800 | ||
Other assets | 2,200 | Long-term debt | 8,500 | ||||
Net fixed assets | 25,300 | Equity | 21,000 | ||||
Total | $ | 33,300 | Total | $ | 33,300 | ||
All Gold Mining | |||||||
Current assets | $ | 2,300 | Current liabilities | $ | 1,550 | ||
Other assets | 710 | Long-term debt | 0 | ||||
Net fixed assets | 10,800 | Equity | 12,260 | ||||
Total | $ | 13,810 | Total | $ | 13,810 | ||
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 $12,050; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $18,000 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 | $ | ||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started