Bosmans Company merges with the Badings Company, which will be dissolved after the merger. The balance sheet of each company is provided here (in 000 of CU).
Balance sheets of the merging companies
(in 000 of CU)

You are informed that, for some assets of Badings Company, the fair value is different from the book value, as indicated in the following table.

Required
Prepare, step by step, the balance sheet of Bosmans after its merger with (absorption of) Badings under the following two sets of hypotheses:
€¢ The net assets of Badings are integrated at fair value
€¢ The net assets of Badings are integrated at book value.
Discuss the pros and cons of each method, using the data of the Bosmans-Badings merger.

Transcribed Image Text:

Bosmans Badings Assets Fixed assets riventories Receivables and cash Total 700 600 150 1,450 500 400 200 1,100 Bosmans Badings Equity and liabilities Capital Retained eamings/Reserves Liabilities Total Number of shares Par value 400 500 550 1.450 4,000 100 600 280 220 1,100 6,000 100 Assets (excerpts) Fixed assets Inventories Receivables and cash Book value Fair value 500 400 200 560 390 170