Required:

(a) The business of V. A. Fraga is taken over by T. Malloy in its entirety. The assets are deemed to be worth the statement of financial position values as shown. The price paid by Malloy is £260,000. Show the opening statement of financial position of Malloy.

(b) Suppose instead that F. Templar had taken over Fraga's business. He does not take over the bank balance, and values premises at £205,000 and inventory at £36,100. The price paid by him is also £260,000. Show the opening statement of financial position of Templar.

Transcribed Image Text:

Non-current assets Premises Current assets Inventory Accounts receivable Bank Total assets Current liabilities Accounts payable Net assets Capital V. A. Fraga Statement of Financial Position as at 31 March 2016 190,000 39,200 18,417 828 58,445 248,445 (23,216) 225,229 225,229