Silver Enterprises has acquired All Gold Mining in a merger transaction. The fol

Question

Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms:

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 $9,250; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $14,500 in new long-term dept to finance the acquisition.

Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms:

Explanation / Answer

Silver Enterprises, post-merger   Current assets    6700$   Current liabilities 4510$   Other assets 2070$   Long-term debt 22300$   Net fixed assets 27550$   Equity 14000$   Goodwill 4490$      Total 40810$      Total 40810$ Long term debt=14500+7800=22300$ Calculation of Goodwill/Capital reserve Net Fixed assets 9250 Other assets 570 Current assets 1600 Goodwill(B/F) 4490 Curent liabilitys 1410 Purchase consideration 14500

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