Assume that the following balance sheets are stated at book value. Meat CompanyCurrent assets$ 14,400Current liabilities$ 6,500Net fixed assets39,600Long-term debt11,000 Equity36,500 Total$ 54,000Total$ 54,000 Loaf, IncorporatedCurrent assets$ 4,600Current liabilities$ 2,500Net fixed assets11,200Long-term debt3,100 Equity10,200 Total$ 15,800Total$ 15,800 Suppose the fair market value of Loaf’s fixed assets is $16,500 versus the $11,200 book value shown. Meat pays $23,200 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method.Meat Company, post-mergerCurrent assets | Current liabilitiesFixed assets | Long-term debtGoodwill | EquityTotal= Total=

Post merger long-term debt = Long-term debt of Meat Company + Long-term debt of Loaf, Incorporated +…

Answered: Assume that the following balance…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Assume that the following balance sheets are stated at book value.

Meat Company
Current assets	$ 14,400	Current liabilities	$ 6,500
Net fixed assets	39,600	Long-term debt	11,000
		Equity	36,500

Total	$ 54,000	Total	$ 54,000

Loaf, Incorporated
Current assets	$ 4,600	Current liabilities	$ 2,500
Net fixed assets	11,200	Long-term debt	3,100
		Equity	10,200

Total	$ 15,800	Total	$ 15,800

Suppose the fair market value of Loaf’s fixed assets is $16,500 versus the $11,200 book value shown. Meat pays $23,200 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method.

Meat Company, post-merger

Current assets | Current liabilities

Fixed assets | Long-term debt

Goodwill | Equity

Total= Total=

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