Reference no: EM13361421

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.