Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration: 

Cash $20 000
Land In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100 000. It has a fair value of $140000. Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $ 30,000 as part of the Gizmo Machine acquisition.

REQUIRED

1. Calculate the acquisition cost of the Gizmo Machine.

2. Provide the journal entries that would appear in Tea Tree Bay Ltd’s books to account for the acquisition of the Gizmo Machine.