Mane Ltd acquired 70% of the ordinary shares of Milner Ltd on 30 June 2020. The cost
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Question:
Mane Ltd acquired 70% of the ordinary shares of Milner Ltd on 30 June 2020. The cost of acquisition was $2.50 cash per share of Milner plus one share in Mane for every two shares acquired in Milner. Half the cash is payable at acquisition, and the other half is payable in one year’s time. Mane’s incremental borrowing rate is 5% (discount factor: 0.9524). Shares of Mane and Milner were trading at $5.50 and $3.80 respectively on 30 June 2020. The cost of issuing shares in Mane Ltd was $5,000.
Required:
Prepare journal entries to record the acquisition of Milner Ltd by Mane Ltd and the deferred payment. Rounds all journals to the nearest whole number.
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
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