Question: In the previous problem, construct the balance sheet for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The
In the previous problem, construct the balance sheet for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The market value of All Gold Mining's fixed assets is $5,800; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $10,500 in new long-term debt to finance the acquisition.
In the previous problem,
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Silver Enterprises Current assets Other assets Net fixed assets 5,200 3,700 17.300 $26,200 $ 8,600 Current liabilities Long-term debt Equity 1,800 Total $26,200 Total All Gold Mining $2,300 Current assets Other assets Net fixed assets $2,500 850 5,800 $9,150 Current liabilities Long-term debt Equity 6.850 $9,150 Total Total
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Since the acquisition is funded by longterm debt the postmerger balance sheet will have longterm deb... View full answer
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