Balance Sheets for Mergers:
Silver Enterprises has acquired All Gold Mining in a merger transaction. Construct the balance sheet for the new corporation if the merger is treated as a purchase of interests for accounting purposes. The following balance sheets represents the premerger book values for both firms.
Silver Enterprises
Current assets $ 5,300 Current liabilities $ 3,100
Other assets 1,500 Long-term debt 7,800
Net fixed assets 17,900 Equity 13,800
Total $24,700 Total $24,700
All Gold Mining
Current assets $ 1,400 Current liabilities $ 1,460
Other assets 570 Long-term debt 0
Net fixed assets 7,400 Equity 7,910
Total $ 9,370 Total $ 9,370
The market value of All Gold Mining’s fixed assets is $9,100; the market value for current and other assets are the same as the book values. Assume that Silver Enterprises issues $15,000 in new long-term debt to finance the acquisition.