Assume that the following balance sheets are stated at book value. Construct a post-merger balance sheet assuming that Reflection plc purchases Lhanger plc, and both sets of accounts are presented according to International Financial Reporting Standards.

The fair market value of Lhangers’s non-current assets is £10,000 versus the £2,600 book value shown. Reflection pays £18,000 for Lhanger and raises the needed funds through an issue of long-term debt. Construct the post-merger balance sheet.

Transcribed Image Text:

Current assets Non-current assets Total Current assets Non-current assets Total REFLECTION pic () 12,000 17,000 29,000 6,400 2,600 9,000 Current liabilities Non-current liabilities Equity Total LHANGER plc Current liabilities Non-current liabilities Equity Total () 2,100 5,900 21,000 29,000 () 1,600 2,900 4,500 9,000