Problem 1.

Chia-Hui Yen (Grace)

Consolidated Balance Sheets

Buckstar Antelope Antelope
ASSETS Book Book Market Adjusting Entries Consolidated
Current assets:
Cash and cash equivalents 9,886,427 281,261 10,167,688
Accounts receivable (net) 3,116,864 287,925 283,700 (4,225) 3,400,564
Other receivables 1,544,281 157,433 1,701,714
Income tax receivable 149,304 129,453 278,757
Inventories 10,228,527 691,658 702,566 10,908 10,931,093
Prepaid expenses and other current assets 1,690,668 148,757 1,839,425
Total current assets 26,616,071 1,696,487 6,683 28,319,241

Property and equipment, net 83,798,120 2,890,433 2,645,715 (244,718) 86,443,835

Equity and other investments 32,296 258,846 311,612 52,766 343,908
Restricted cash 410,831 410,831
Other assets 982,334 219,422 1,201,756
Goodwill 215,625 734,325 949,950
Total assets 111,839,652 5,280,813 549,056 117,669,521

Current liabilities:
Accounts payable 9,650,326 390,836 10,041,162
Accrued compensation 7,863,445 332,331 8,195,776
Accrued expenses 9,318,442 424,476 9,742,918
Deferred revenue 9,987,724 296,900 10,284,624
Total current liabilities 36,819,937 1,444,543 38,264,480

Long-term debt 11,271,186 550,121 531,252 (18,869) 11,802,438

Deferred revenue 2,853,500 2,853,500
Income tax liability 473,064 354,074 827,138
Total long term liabilities 14,597,750 904,195 (18,869) 15,483,076

Shareholders’ equity:
Common stock 193,706 738 200,000 (738) 393,706
Additional paid-in capital 124,231,862 741,971 3,300,000 (741,971) 127,531,862
Retained earnings or deficit -64,003,603 2,189,366 (2,189,366) -64,003,603
Total shareholders’ equity 60,421,965 2,932,075 567,925 63,921,965

Total liabilities and shareholders’ equity 111,839,652 5,280,813 549,056 117,669,521

Problem 2.

(a) Please construct a consolidated balance sheet for BNSF at the end
of the day, after the transaction is completed, under U.S. GAAP.

Consolidated Balance Sheets

Dollars in millions
BNSF KCS KCS
Assets book book market Adjusting Entries Consolidated
Current assets:
Cash and cash equivalents 330 56 386
Accounts receivable, net 790 243 251 8 1,041
Materials and supplies 579 90 92 2 671
Current portion of deferred income taxes 290 178 468
Other current assets 192 67 259
Total current assets 2,181 634 2,825

Investment in KCS 675 (1,548) (97) -

382 588

Property and equipment, net 29,567 3,975 3,516 (459) 33,083

Other assets 1,835 70 1,905
Total assets 34,258 4,679 (1,125) 37,812

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable and other current liabilities 2,824 121 2,945
Long-term debt due within one year 411 651 682 31 1,093
Accrued liabilities (Note 5) 327 327
Total current liabilities 3,235 1,099 4,365

Long-term debt and commercial paper 7,735 1,105 1,006 (99) 8,741
Deferred income taxes 8,484 499 8,983
Casualty and environmental liabilities 843 843
Pension and retiree health and welfare liabilit 444 444
Employee separation costs 77 77
Other liabilities 1,621 256 1,877
Total liabilities 22,439 2,959 20,965

Non-controlling interest 172 (97) 75

Common stock 530 100 (90) (10) 530

Additional paid-in-capital 7,498 451 (406) (45) 7,498
Retained earnings 11,152 1,169 (1,052) (117) 11,740
588
Treasury stock, at cost (7,222) (7,222)
Accumulated other comprehensive loss (139) 0 (139)
Total stockholders’ equity 11,819 1,720 12,482
Total liabilities and stockholders’ equity 34,258 4,679 (1,125) 37,812

(b) Please construct a consolidated balance sheet for BNSF at the end
of the day, after the transaction is completed, under IFRS, assuming
that BNSF chooses to value non-controlling interests at their share of
book value instead of their market value.

Consolidated Balance Sheets

Dollars in millions
BNSF KCS KCS
Assets book book market Adjusting Entries Consolidated
Current assets:
Cash and cash equivalents 330 56 386
Accounts receivable, net 790 243 251 8 1,041
Materials and supplies 579 90 92 2 671
Current portion of deferred income taxes 290 178 468
Other current assets 192 67 259
Total current assets 2,181 634 2,825

Investment in KCS 675 (1,548) -

382 491

Property and equipment, net 29,567 3,975 3,516 (459) 33,083

Other assets 1,835 85 1,920
Total assets 34,258 4,694 (1,125) 37,827

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable and other current liabilities 2,824 121 2,945
Long-term debt due within one year 411 651 682 31 1,093
Accrued liabilities (Note 5) 327 327
Total current liabilities 3,235 1,099 4,365

Long-term debt and commercial paper 7,735 1,105 1,006 (99) 8,741
Deferred income taxes 8,484 499 8,983
Casualty and environmental liabilities 843 843
Pension and retiree health and welfare liabilit 444 444
Employee separation costs 77 77
Other liabilities 1,621 256 1,877
Total liabilities 22,439 2,959 20,965

Non-controlling interest 172 172

Common stock 530 100 (90) (10) 530

Additional paid-in-capital 7,498 451 (406) (45) 7,498
Retained earnings 11,152 1,184 (1,052) (117) 11,658
491
Treasury stock, at cost (7,222) (7,222)
Accumulated other comprehensive loss (139) 0 (139)
Total stockholders’ equity 11,819 1,735 12,497
Total liabilities and stockholders’ equity 34,258 4,694 (1,125) 37,827