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 $14,850; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $21,500 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

Purchase Consideration (PC) = Assets - Liabilities

=3000+850+14850 - 1690 = 17,010

GoodWill = PC - Equity = 17010 - 15760 =1250

Silver Enterprises, post-merger   Current assets 9,500   Current liabilities 6,190   Other assets 8,240   Long-term debt 30,700   Net fixed assets 45,900   Equity 28,000   Goodwill 1250      Total 64,890      Total 64,890

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.