how to calculate question b ? Please don't provide answer in image format thank you On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,440 cash.The statements of financial position of the two companies immediately after the acquisition transaction appear below.Plant and equipment (net)Investment in S CompanyInventoryAccounts receivableCashOrdinary sharesRetained earningsLong-term liabilitiesOther current liabilitiesAccounts payableP CompanyCarryingAmount$8,7087,4405,7604,3502,700$ 28,950$ 11,10011,0503,8001,8001,200$ 28,950S CompanyCarryingAmount$ 7,6004,6002,4001,650$ 16,250$3,6006,3502,6002,4001,300$ 16,250FairValue$ 6,3005,1002,4001,6502,6002,4001,30012 (b) Calculate the current ratio and debt-to-equity ratio for P Company under the identifiable net assets (INA) method and the fair valueenterprise (FVE) method. (Round "Current ratio" answers to 2 decimal places and "Debt to equity ratio" answers to 4 decimalplaces.)Current ratioDebt to equity ratioINA0.600.8600FVE0.420.4300

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On December 31, Year 1, P Company purchased 80 % of the outstanding shares of S Company for $7,440 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below.

On December 31, Year 1, P Company purchased 80 % of the outstanding shares of S Company for $7,440 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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