Knapps Enterprises has acquired Leamington Corp. in a merger transaction. The following statements of financial position represent the pre-merger book values for both firms: Current assets Knapps Enterprises $ 5,300 Other assets 1,500 Net fixed assets 17,900 Current liabilities Long-term debt Equity $ 3,100 7,800 13,800 Total $24,700 Total $24,700 Current assets Leamington Corp. $1,400 Current liabilities Other assets 570 Long-term debt Net fixed assets Total 7,400 Equity $9,370 Total $1,460 0 7,910 $9,370 Construct the statement of financial position for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The market value of Leamington's fixed assets is $9,100; the market values for current and other assets are the same as the book values. Assume that Knapps Enterprises issues $15,000 in new long-term debt to finance the acquisition. (Omit "$" sign in your response.)
Knapps Enterprises has acquired Leamington Corp. in a merger transaction. The following statements of financial position represent the pre-merger book values for both firms: Current assets Knapps Enterprises $ 5,300 Other assets 1,500 Net fixed assets 17,900 Current liabilities Long-term debt Equity $ 3,100 7,800 13,800 Total $24,700 Total $24,700 Current assets Leamington Corp. $1,400 Current liabilities Other assets 570 Long-term debt Net fixed assets Total 7,400 Equity $9,370 Total $1,460 0 7,910 $9,370 Construct the statement of financial position for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The market value of Leamington's fixed assets is $9,100; the market values for current and other assets are the same as the book values. Assume that Knapps Enterprises issues $15,000 in new long-term debt to finance the acquisition. (Omit "$" sign in your response.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bhupatbhai
Transcribed Image Text:Knapps Enterprises has acquired Leamington Corp. in a merger transaction. The following statements of financial position represent
the pre-merger book values for both firms:
Current assets
Other assets
Net fixed assets
Total
Knapps Enterprises
$ 5,300
Current liabilities
$ 3,100
1,500
17,900
Long-term debt
Equity
7,800
13,800
$24,700
Total
$24,700
Leamington Corp.
Current assets
Other assets
$1,400
570
Current liabilities
Long-term debt
$1,460
0
Net fixed assets
Total
7,400
Equity
$9,370
Total
7,910
$9,370
Construct the statement of financial position for the new corporation assuming that the transaction is treated as a purchase for
accounting purposes. The market value of Leamington's fixed assets is $9,100; the market values for current and other assets are the
same as the book values. Assume that Knapps Enterprises issues $15,000 in new long-term debt to finance the acquisition. (Omit "$"
sign in your response.)
Knapps Enterprises, post-merger
Current liabilities
Long-term debt
Equity
Current assets
$
Other assets
Net fixed assets
Goodwill
Total
$
Total
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