Assume the Following Balance Sheets Are Stated at Book Value

question 87

Multiple Choice

Assume the following balance sheets are stated at book value. Suppose the fair market value of Loaf's fixed assets is $7,200 versus the $3,300 book value shown.Meat pays $10,200 for Loaf and raises the needed funds through an issue of long-term debt.Assume the purchase method of accounting is used.The post-merger balance sheet of Meat Co.will have total debt of ______ and total equity of ______.

• A)$1,600; $11,500
• B)$1,600; $15,400
• C)$10,200; $15,400
• D)$14,500; $11,500
• E)$14,500; $15,400

---

Definitions:

Partnership Obligation

Legal responsibilities and duties that arise in a business partnership, including fiduciary duties and liabilities shared among partners.

Participated

Taking part or getting involved in an activity or event.

Knew About

Had awareness or knowledge of a fact, situation, or detail, often relevant in legal and decision-making contexts.

Agency Law

The area of law dealing with the actions of agents, who are authorized to act on behalf of others (principals) in legal or business transactions.