G Company is considering the takeover of K Company whereby it will issue 6,000 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 20,000 shares outstanding, which were trading at $4.90 per share. The following information has been assembled:

Required:
(a) Prepare G Company's consolidated balance sheet immediately after the combination using
(i) The new-entity method, and
(ii) The acquisition method.
(b) Calculate the current ratio and debt-to-equity ratio for G Company under both methods. Explain which method shows the strongest liquidity and solvency position and which method best reflects the true financial condition of the company.

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G Company K Company Carrying amount Carrying amount Fair value Fair value Current assets Plant assets (net) 40,000 60,000 $100,000 S 20,000 15,000 30,000 35,000 $100,000 10,000 20,000 $ 30,000 5,000 2,500 10,000 12,500 $ 30,000 $47,500 70,000 $9,200 25,000 20,000 19,000 5,000 3,200 Current liabilities Long-term debt Common shares Retained earnings