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The July 31, Year 3, balance sheets of two companies that are parties to a business combination are as follows: Ravinder Current assets Plant
The July 31, Year 3, balance sheets of two companies that are parties to a business combination are as follows: Ravinder Current assets Plant and equipment Accumulated depreciation Patents (net) Robin Inc. Corp. Carrying Amount Carrying Amount Fair Value $ 1,601,800 $ 1,331,800 420,900 $ 471,600 1,341,800 975,600 (250,900) (501,800) 73,800 $ 2,682,700 $ 1,260,900 Current liabilities Long-term debt Common shares Retained earnings $ 1,361,800 $ 253,800 481,800 360,900 253,800 385,800 721,800 117,300 $ 2,682,700 $ 169,800 476,400 1,260,900 In addition to the assets identified above, Ravinder Corp. attributed a value of $101,800 to a major research project that Robin Inc. was working on. Robin Inc. feels that it is within a year of developing a prototype for a state-of-the-art bio-medical device. If this device can ever be patented, it could be worth hundreds of thousands of dollars. Effective on August 1, Year 3, the shareholders of Robin Inc. accepted an offer from Ravinder Corp. to purchase 80% of their common shares for $1,112,000 in cash. Ravinder Corp.'s legal fees for investigating and drawing up the share purchase agreement amounted to $25,900.
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