Reference no: EM13333390
Problem
Pre-Contribution Balance Sheets and Fair Values
June 30, 20X9
(in thousands of $)
Swag Co. Perk Ltd.
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Pre-
Contribution
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Fair
Value
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Pre-
Contribution
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Fair
Value
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Assets:
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Cash and cash equivalents
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1,645
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1,645
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840
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840
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Accounts receivable
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1,400
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1,400
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1,260
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1,260
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Land
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3,500
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5,950
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-
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-
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Building (net)
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9,450
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7,700
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5,880
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7,700
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Equipment (net)
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420
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525
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2,170
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2,800
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Total assets
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16,415
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10,150
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Liabilities and
shareholders' equity:
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Accounts payable
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455
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455
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770
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770
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Long-term debt
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1,400
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1,400
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700
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630
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Total liabilities
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1,855
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1,470
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Common shares
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10,500
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4,865
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Retained earnings
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4,060
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3,815
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Total shareholders' equity
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14,560
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8,680
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Total liabilities and
shareholders' equity
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16,415
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10,150
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Swag Co. acquired Perk on June 30, 20X9. Both companies have June 30 year-ends. Before the combination, Swag and Perk had, respectively, 840,000 and 525,000 common shares, issued and outstanding.
Required:
Prepare Swag's consolidated balance sheet under each of the following independent situations:
a) Swag purchased the assets and assumed the liabilities of Perk by paying $1,400,000 in cash and issuing a $12,600,000 note.
b) Swag issued 280,000 common shares in exchange for all of Perk's outstanding shares. The fair value of the Swag shares was $14,000,000.
c) In exchange for all of Perk's outstanding shares, Swag paid $700,000 cash and issued 189,000 common shares with a market value of $9,450,000.
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Prepare swags consolidated balance sheet
: Prepare Swag's consolidated balance sheet under each of the following independent situations - swag purchased the assets and assumed the liabilities of Perk by paying $1,400,000 in cash and issuing a $12,600,000 note.
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