On 1^st December 2018, Night Limited acquired all the assets (except cash and cash equivalent) and current liabilities of Day Limited. The fair values of Day Limited's assets and liabilities at this date were:

Cash	$50,000
Account receivable	80,000
Money market fund	30,000
Short term government bonds	20,000
Inventory	70,000
Furniture and fittings	60,000
Plant	45,000
Land	65,000
Short term deposit (1 month)	25,000
Accounts payable	25,000
Loan payable	30,000
Mortgage interest payable	15,000
Long term mortgage	180,000
Debenture (mature in August, 2019)	160,000

 

In exchange, Night Limited is to provide sufficient extra cash to allow Day Limited to repay all its remaining debts. Furthermore, Night Limited will issue 100,000 shares at a fair value of $1 per share on 1^st December 2018.

The financial year for Night Limited is January to December.

 

Prepare the journal entries for Night Limited to record the business combination on 1^st December 2018 (Show all the workings).  

Answer rating: 100% (QA)

To record the business combination between Night Limited and Day Limited on December 1 2018 we need ... View the full answer