Question
The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: E Ltd. J Ltd. Cash and receivables $
The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows:
E Ltd. | J Ltd. | |||||
Cash and receivables | $ | 96,050 | $ | 19,600 | ||
Inventory | 57,100 | 9,050 | ||||
Plant assets (net) | 228,200 | 70,600 | ||||
Intangible assets | 24,050 | 6,100 | ||||
$ | 405,400 | $ | 105,350 | |||
Current liabilities | $ | 63,100 | $ | 30,100 | ||
Long-term debt | 97,600 | 45,200 | ||||
Common shares | 153,200 | 46,600 | ||||
Retained earnings (deficit) | 91,500 | (16,550 | ) | |||
$ | 405,400 | $ | 105,350 | |||
On December 31, Year 6, E Ltd. issued 483 shares, with a fair value of $40 each, for 70% of the outstanding shares of J Ltd. Costs involved in the acquisition, paid in cash, were as follows:
Costs of arranging the acquisition | $ | 2,510 |
Costs of issuing shares | 1,620 | |
$ | 4,130 | |
The carrying amounts of J Ltd.s net assets were equal to fair values on this date except for the following:
Fair value | ||
Plant assets | $ | 65,050 |
Long-term debt | 40,200 | |
E Ltd. was identified as the acquirer in the combination.
Required:
(a) Prepare the consolidated balance sheet of E Ltd. on December 31, Year 6, under the identifiable net assets method.
|
(b) Prepare the consolidated balance sheet of E Ltd. on December 31, Year 6, under the fair value enterprise method.
E Ltd. | |
Consolidated Balance Sheet | |
December 31, Year 6 | |
Assets | |
$0 | |
Liabilities and Equity | |
$0 |
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