Assume that the following statements of financial position are stated and a book
ID: 2437697 • Letter: A
Question
Assume that the following statements of financial position are stated and a book value. Construct a post-merger statement of financial position assuming that Amherst Co. purchases Essex Inc. and the pooling of interests method of accounting is used.
Amherst co. Essex INC.
Current Assets $12,000 Current Assests 3400
Net fixed Asstes 36,000 Net fixed assests 6,400
Total = 48,000 Total 9,800
Current liabilitoes $5,300 Current liab 1,300
long term debt 9,800 long term debt 1,900
equity 32,900 equity 6,600
total = 48,000 total = 9,800
Explanation / Answer
Under pooling method, all the accounts of both companies are combined together and accounts are total in the new company after post merger
Current assets = (12000+ 3400) = 15400
Net Fixed assets = (36000+6400) = 42400
Current Liabilities = (5300+1300) = 6600
Long Term Debt = (9800+1900) = 11700
Equity = (32900+6600) = 39500
Amherst Co, post merger
Liabilities Assets
Equity $ 39500 Current assets $ 15400
Long term Liability $ 11700 Net Fixed assets $ 42400
Current Liability $ 6600
Total Liabilities $ 57800 Total assets $ 57800
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