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Lakecraft Company Balance Sheet December 31, 2015 Assets Liabilities and Equity $ 60,000 $100,000 200,000 Current assets Current liabilities . . Equipment (net) Building (net) Stockholders' equity: Common stock ($5 par) . Retained earnings. 270,000 $100,000 410,000 510,000 Total assets.. $570,000 Total liabilities and equity $570,000

Lakecraft Company Balance Sheet December 31, 2015 Assets Liabilities and Equity $ 60,000 $100,000 200,000 Current assets Current liabilities . . Equipment (net) Building (net) Stockholders' equity: Common stock ($5 par) . Retained earnings. 270,000 $100,000 410,000 510,000 Total assets.. $570,000 Total liabilities and equity $570,000

FINANCIAL ACCOUNTING
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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Lakecraft Company has the following balance sheet on December 31, 2015, when it is acquired for $950,000 in cash by Argo Corporation:

All assets have fair values equal to their book values. The combination is structured as a taxfree exchange. Lakecraft Company has a tax loss carryforward of $300,000, which it has not recorded. The balance of the $300,000 tax loss carryover is considered fully realizable. Argo is taxed at a rate of 30%.
Record the acquisition of Lakecraft Company by Argo Corporation.

Lakecraft Company Balance Sheet December 31, 2015 Assets Liabilities and Equity $ 60,000 $100,000 200,000 Current assets Current liabilities . . Equipment (net) Building (net) Stockholders' equity: Common stock ($5 par) . Retained earnings. 270,000 $100,000 410,000 510,000 Total assets.. $570,000 Total liabilities and equity $570,000
Transcribed Image Text:Lakecraft Company Balance Sheet December 31, 2015 Assets Liabilities and Equity $ 60,000 $100,000 200,000 Current assets Current liabilities . . Equipment (net) Building (net) Stockholders' equity: Common stock ($5 par) . Retained earnings. 270,000 $100,000 410,000 510,000 Total assets.. $570,000 Total liabilities and equity $570,000
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