Assume that the following balance sheets are stated at book value. The fair market value of...

 

Transcribed Image Text:

Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,900. Jurion pays $17,920 for James and raises the needed funds through an issue of long-term debt. Jurion Co. Current assets $ 13,200 Current liabilities $ 5,940 Net fixed 38,400 Long-term debt 10,600 assets Equity 35,060 Total $51,600 Total $51,600 James, Inc. Current assets $3,880 Current liabilities $1,940 Net fixed 7,680 Long-term debt 12,380 assets Equity 7,240 Total $11,560 Total $11,560 Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $10,900. Jurion pays $17,920 for James and raises the needed funds through an issue of long-term debt. Jurion Co. Current assets $ 13,200 Current liabilities $ 5,940 Net fixed 38,400 Long-term debt 10,600 assets Equity 35,060 Total $51,600 Total $51,600 James, Inc. Current assets $3,880 Current liabilities $1,940 Net fixed 7,680 Long-term debt 12,380 assets Equity 7,240 Total $11,560 Total $11,560