Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 45

Help Save is a private not-for-profit organization that operates in Kansas.Swim For Safety is a private not-for-profit organization that operates in Missouri.The leaders of these two organizations have decided to combine forces on January 1, 2010, in order to have a bigger impact from their work.However, they are currently discussing ways by which this combination can be brought about.Statements of financial position for both organizations at that date appear below.
The buildings and equipment reported by Help Save have a fair value of $900,000.The buildings and equipment reported by Swim For Safety have a fair value of $730,000.
a.Assume Help Save pays $1 million in cash from its unrestricted net assets to gain complete control over Swim For Safety.It is not assumed that Swim For Safety will be predominantly supported by contributions and investment income in the future.What balances will appear on the combined balance sheet immediately after control is gained
b.Assume Help Save pays $990,000 in cash from its unrestricted net assets to gain complete control over Swim For Safety.It is assumed that Swim For Safety will be predominantly supported by contributions and investment income in the future.What balances will appear on the combined balance sheet immediately after control is gained
c.Assume that these two organizations are combined into a new private not-for-profit organization to be known as Help-Swim-Save.A new governing body will be formed to manage and operate this new organization.What balances will appear on the combined balance sheet immediately after control is gained