Buyer: $10,000 assets, $8,000 liabilities, $2,000 equity. Seller: $1,000 assets, $800 liabilities, $200 equity. Buyer pays $500 cash for 100% of seller. Walk through the combined balance sheet.

Question

IBPrep · Accepted Answer

Liabilities: combined $8,000 + $800 = $8,800. SE: $2,000 (seller's $200 SE wipes out).

Buyer: $10,000 assets, $8,000 liabilities, $2,000 equity. Seller: $1,000 assets, $800 liabilities, $200 equity. Buyer pays $500 cash for 100% of seller. Walk through the combined balance sheet.

Answer

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