Reference no: EM132845429
Question - The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows:
|
|
E Ltd.
|
J Ltd.
|
|
Cash and receivables
|
$96,850
|
$21,200
|
|
Inventory
|
58,700
|
9,850
|
|
Plant assets (net)
|
231,400
|
72,200
|
|
Intangible assets
|
24,850
|
7,700
|
|
|
$411,800
|
$110,950
|
|
Current liabilities
|
$64,700
|
$30,100
|
|
Long-term debt
|
99,200
|
45,200
|
|
Common shares
|
156,400
|
46,600
|
|
Retained earnings (deficit)
|
91,500
|
(10,950)
|
|
|
$411,800
|
$110,950
|
On December 31, Year 6, E Ltd. issued 525 shares, with a fair value of $40 each, for 70% of the outstanding shares of J Ltd. Costs involved in the acquisition, paid in cash, were as follows:
Costs of arranging the acquisition $2,670
Costs of issuing shares 1,940
$4,610
The carrying amounts of J Ltd.'s net assets were equal to fair values on this date except for the following:
Fair value Plant assets $65,850
Long-term debt 43,400
E Ltd. was identified as the acquirer in the combination.
Required -
(a) Create the consolidated balance sheet of E Ltd. on December 31, Year 6, under the identifiable net assets method.
(b) Create the consolidated balance sheet of E Ltd. on December 31, Year 6, under the fair value enterprise method.