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Assume that the following balance sheets are stated at book value.   Meat Company Current assets $ 14,400 Current liabilities $ 6,500 Net fixed assets 39,600 Long-term debt 11,000     Equity 36,500         Total $ 54,000 Total $ 54,000           Loaf, Incorporated Current assets $ 4,600 Current liabilities $ 2,500 Net fixed assets 11,200 Long-term debt 3,100     Equity 10,200         Total $ 15,800 Total $ 15,800           Suppose the fair market value of Loaf’s fixed assets is $16,500 versus the $11,200 book value shown. Meat pays $23,200 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method. Meat Company, post-merger Current assets     |     Current liabilities Fixed assets         |      Long-term debt Goodwill               |      Equity Total=                             Total=

Assume that the following balance sheets are stated at book value.   Meat Company Current assets $ 14,400 Current liabilities $ 6,500 Net fixed assets 39,600 Long-term debt 11,000     Equity 36,500         Total $ 54,000 Total $ 54,000           Loaf, Incorporated Current assets $ 4,600 Current liabilities $ 2,500 Net fixed assets 11,200 Long-term debt 3,100     Equity 10,200         Total $ 15,800 Total $ 15,800           Suppose the fair market value of Loaf’s fixed assets is $16,500 versus the $11,200 book value shown. Meat pays $23,200 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method. Meat Company, post-merger Current assets     |     Current liabilities Fixed assets         |      Long-term debt Goodwill               |      Equity Total=                             Total=

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 49E
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Assume that the following balance sheets are stated at book value.
 

Meat Company
Current assets $ 14,400 Current liabilities $ 6,500
Net fixed assets 39,600 Long-term debt 11,000
    Equity 36,500
       
Total $ 54,000 Total $ 54,000
       

 

Loaf, Incorporated
Current assets $ 4,600 Current liabilities $ 2,500
Net fixed assets 11,200 Long-term debt 3,100
    Equity 10,200
       
Total $ 15,800 Total $ 15,800
       

 

Suppose the fair market value of Loaf’s fixed assets is $16,500 versus the $11,200 book value shown. Meat pays $23,200 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method.

Meat Company, post-merger

Current assets     |     Current liabilities

Fixed assets         |      Long-term debt

Goodwill               |      Equity

Total=                             Total=

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