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Assume that the following statements of financial position are stated and a book value
Assume that the following statements of financial position are stated and a book value. Construct a post-merger statement of financial position assuming that Amherst Co. purchases Essex Inc. and the pooling of interests method of accounting is used. Amherst Co. Current assets $22,000 Current liabilities $9,300 Net fixed assets 56,000 Long-term debt 19,800 Equity 48,900 Total $78,000 Total $78,000
Essex Inc. Current assets $6,400 Current liabilities $3,800 Net fixed assets 9,800 Long-term debt 3,100 Equity 9,300 Total $16,200 Total $16,200
Expert Solution
Assets and liabilities after merger Under pooling of interests method of accounting :
Current assets = $22000+$6400 = $28400
Current liabilities = $9300+$3800 = $13100
Net fixed assets = $56000+$9800 = $65800
Long term debt = $19800+$3100 = $22900
Equity = $48900+9300 =$58200
| Amherst Co. After merger | |||
| Liabilities | Amount | Assets | Amount |
| Current liabilities | 13100 | Current assets | 28400 |
| Long term Debt | 22900 | Net fixed assets | 65800 |
| Equity | 58200 | ||
| Total Liabilities | 94200 | Total Assets | 94200 |
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