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Equity

6,000

Total

$8,000

Total

(continued )

Incorporating Goodwill In the previous problem, suppose the fair market value of Sorenson's fixed assets is $10,000 versus the $5,000 book value shown. Sipowicz pays $14,000 for Sorenson and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet now, assuming that the purchase method of accounting is used.

Balance Sheets for Mergers Silver Enterprises has acquired All Gold Mining in a merger transaction. Construct the balance sheet for the new corporation if the merger is treated as a pooling of interests for accounting purposes. The following balance sheets represent the premerger book values for both firms.

Silver Enterprises

Current assets

$2,000

Current liabilities

$1,400

Other assets

0 0

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