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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: Knapps Enterprises Current assets $ 5,300 Current liabilities $ 3,100 Other assets 1,500 Net fixed assets 17,900 Long-term debt Equity 7,800 13,800 Total $24,700 Total $24,700 Leamington Corp. Current assets $1,400 Other assets 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

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: Knapps Enterprises Current assets $ 5,300 Current liabilities $ 3,100 Other assets 1,500 Net fixed assets 17,900 Long-term debt Equity 7,800 13,800 Total $24,700 Total $24,700 Leamington Corp. Current assets $1,400 Other assets 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

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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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
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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