Pre-Contribution Balance Sheets and Fair Values
June 30, 20X9(in thousands of $)
Swag Co. Perk Ltd.
|
|
Pre-
Contribution
|
Fair
Value
|
Pre-
Contribution
|
Fair
Value
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
1,645
|
1,645
|
840
|
840
|
|
Accounts receivable
|
1,400
|
1,400
|
1,260
|
1,260
|
|
Land
|
3,500
|
5,950
|
-
|
-
|
|
Building (net)
|
9,450
|
7,700
|
5,880
|
7,700
|
|
Equipment (net)
|
420
|
525
|
2,170
|
2,800
|
|
Total assets
|
16,415
|
|
10,150
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity:
|
|
|
|
|
|
Accounts payable
|
455
|
455
|
770
|
770
|
|
Long-term debt
|
1,400
|
1,400
|
700
|
630
|
|
Total liabilities
|
1,855
|
|
1,470
|
|
|
Common shares
|
10,500
|
|
4,865
|
|
|
Retained earnings
|
4,060
|
|
3,815
|
|
|
Total shareholders' equity
|
14,560
|
|
8,680
|
|
|
Total liabilities and
shareholders' equity
|
16,415
|
|
10,150
|
|
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.