The case is adopted from Churyk, N. I., Weirich, I. R., and Pearson, I. C. (2012), Mastering the Codification and elFRS: A Case Approach. John Wiley & Sons. The case is as follows: Supplyrite Company distributes various small tools and supplies to industrial, commercial, institutional, and governmental markets throughout the United States. During the past two years, Supplyrite has seen a significant decrease in the demand for its products. As part of Supplyrite's long-term strategic plan, its management has been in negotiations to purchase 100% of Equipco Inc. in order to diversify Supplyrite's product offerings and customer base. Equipco distributes various-sized equipment to markets similar to Supplyrite's. Supplyrite and Equipco are both SEC registrants with June 30 year-ends. Ignore all tax effects. At the close of business on June 30, 2009, the two companies consummated their agreement whereby Supplyrite would purchase Equipco's common stock for $37,500,000 in cash and a $10,000,000 note payable to the sellers of Equipco. The note payable to the sellers of Equipco carries an interest rate of 12% and will be paid off in equal quarterly principal installments of $500,000. In order to finance this transaction, Supplyrite, as the borrower, obtained a $37,500,000 note payable from a financial institution, which is to be repaid in equal installments over ten years, plus interest at 9%