On 1 December 2021, Braddock Ltd purchased a 100% interest in Cele Ltd. The cost of...
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On 1 December 2021, Braddock Ltd purchased a 100% interest in Cele Ltd. The cost of acquisition is $2.5 million plus associated due diligence cost of $65 000. Braddock Ltd has yet recorded the necessary journal entries relating to this acquisition. At the date of acquisition, the statement of financial position of Cele Ltd shows: Assets Current Assets Cash Accounts receivables Allowance for impairment of receivables Inventories Other receivables Total current assets Non-Current Assets Leasehold land, at cost Accumulated amortisation - leasehold land Warehouse, at revaluation Accumulated depreciation - warehouse Plant and machinery, at cost Accumulated depreciation - plant and machinery Total non-current assets Total assets Liabilities Current Liabilities Trade and other payables Bank overdrafts Current tax liability Total current liabilities Current Liabilities Loan payables Total liabilities Net assets $ 1 100 000 (210 000) 230 000 (25 000) 180 000 (56 000) 820 000 (350 000) $ 400 000 890 000 930 000 680 000 2 900 000 205 000 124 000 470 000 799 000 650 000 98 000 53 000 801 000 800 000 $ 3 699 000 1 601 000 2 098 000 Additional information . ● The assets and liabilities of Cele Ltd are fairly stated except for leasehold land which has a fair value of $300 000. Cele Ltd has a brand name that is not recognised on the statement of financial position and that has a fair value of $49 000. Cele Ltd is currently being sued by a previous customer on an unfulfilled order. The expected damages are $100 000. With reference to applicable and relevant accounting standards (AASBs/FRSs) and accounting principles, prepare the following in the books of Braddock Ltd. Q1: Prepare the Acquisition Analysis for the acquisition of the net assets of Cele Ltd on 1 December 2021. Prepare, for accounting purposes, the required joumal entries in the books of Braddock Ltd. (20 marks) On 1 December 2021, Braddock Ltd purchased a 100% interest in Cele Ltd. The cost of acquisition is $2.5 million plus associated due diligence cost of $65 000. Braddock Ltd has yet recorded the necessary journal entries relating to this acquisition. At the date of acquisition, the statement of financial position of Cele Ltd shows: Assets Current Assets Cash Accounts receivables Allowance for impairment of receivables Inventories Other receivables Total current assets Non-Current Assets Leasehold land, at cost Accumulated amortisation - leasehold land Warehouse, at revaluation Accumulated depreciation - warehouse Plant and machinery, at cost Accumulated depreciation - plant and machinery Total non-current assets Total assets Liabilities Current Liabilities Trade and other payables Bank overdrafts Current tax liability Total current liabilities Current Liabilities Loan payables Total liabilities Net assets $ 1 100 000 (210 000) 230 000 (25 000) 180 000 (56 000) 820 000 (350 000) $ 400 000 890 000 930 000 680 000 2 900 000 205 000 124 000 470 000 799 000 650 000 98 000 53 000 801 000 800 000 $ 3 699 000 1 601 000 2 098 000 Additional information . ● The assets and liabilities of Cele Ltd are fairly stated except for leasehold land which has a fair value of $300 000. Cele Ltd has a brand name that is not recognised on the statement of financial position and that has a fair value of $49 000. Cele Ltd is currently being sued by a previous customer on an unfulfilled order. The expected damages are $100 000. With reference to applicable and relevant accounting standards (AASBs/FRSs) and accounting principles, prepare the following in the books of Braddock Ltd. Q1: Prepare the Acquisition Analysis for the acquisition of the net assets of Cele Ltd on 1 December 2021. Prepare, for accounting purposes, the required joumal entries in the books of Braddock Ltd. (20 marks)
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Acquisition Journal entries Cash Ac Debit 400000 Accouunts Receivable Debit 890000 Inventory Debit 9... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting The Financial Chapters
ISBN: 978-0134486857
6th edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
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