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 Current assets Other assets Net fixed assets Silver Enterprises 5,500 Current liabilities 3,500 1,900 Long-term debt 8,200 18,000 22,300 Equity Total $29,700 Total $29,700 All Gold Mining Current assets Other assets Net fixed assets 2,000 Current liabilities 1,490 0 10,760 650 Long-term debt Equity 9,600 Total $12,250 Total $12,250 Construct the balance sheet for the for accounting purposes. The market value of All Gold Mining's fixed assets is $10,850; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $16,500 in new long-term dept to finance the acquisition new corporation assuming that the transaction is treated as a purchase Silver Enterprises, post-merger Current assets Other assets Net fixed assets Goodwil Current liabilities Long-term debt Equity Total Total

Explanation / Answer

Market value of net worth of all gold minig =2000+650+10850]-[1490+0]

               = 12010

Goodwill = Amount paid -Market value

        = 16500-12010 = 4490

Silver Enterprises post Merger Current asset [5500+2000] 7500 current liabilites [3500+1490] 4990 other asset [1900+650] 2550 long term debt [16500+8200] 24700 Net fixed asset [22300+10850] 33150 Equity 18000 Goodwill 4490 Total 47690 total 47690

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