On 1 July 2020 H Ltd acquired the following assets and liabilities from B Ltd: Carrying amount
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Question:
On 1 July 2020 H Ltd acquired the following assets and liabilities from B Ltd:
Carrying amount | Fair value | |
Land | $350,000 | $350,000 |
Equipment (cost $450,000) Motor Vehicles | $280,000 $120,000 | $290,000 $130,000 |
Inventory | $80,000 | $75,000 |
Cash | $35,000 | $35,000 |
Accounts payable | ($28,000) | ($28,000) |
Loans (non-current) | ($100,000) | ($100,000) |
In exchange for these assets and liabilities, H Ltd issued 90 000 shares that had been issued for $4.50 per share but as at 1 July 2020 had a fair value of $6.50 per share. The issue of the shares cost $500 and the cost of the acquisition was $1,000.
Question:
Prepare the journal entries in the records of H Ltd to account for the acquisition of the assets and liabilities of B Ltd.
Expert Answer:
H Ltd Dr Cash 35000 Cr Accounts Payable 28000 Dr Equipment 280000 Cr Cash 29000... View the full answer
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