Assume that the following balance sheets are stated at book value. Meat CompanyCurrent assets$ 21,600Current liabilities$ 7,320Net fixed assets51,600Long-term debt16,420 Equity49,460 Total$ 73,200Total$ 73,200 Loaf, IncorporatedCurrent assets$ 4,700Current liabilities$ 1,800Net fixed assets8,300Long-term debt3,120 Equity8,080 Total$ 13,000Total$ 13,000 Suppose the fair market value of Loaf’s fixed assets is $11,500 versus the $8,300 book value shown. Meat pays $18,400 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 liabilities Fixed assets Long-term debt Goodwill Equity Total 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	$ 21,600	Current liabilities	$ 7,320
Net fixed assets	51,600	Long-term debt	16,420
		Equity	49,460

Total	$ 73,200	Total	$ 73,200

Loaf, Incorporated
Current assets	$ 4,700	Current liabilities	$ 1,800
Net fixed assets	8,300	Long-term debt	3,120
		Equity	8,080

Total	$ 13,000	Total	$ 13,000

Suppose the fair market value of Loaf’s fixed assets is $11,500 versus the $8,300 book value shown. Meat pays $18,400 for Loaf and raises the needed funds through an issue of long-term debt. Construct the postmerger balance sheet under the purchase accounting method.