Puan Ayu, the owner of Ayu Enterprise has decided to convert her business into a company. A new company,...

 

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Puan Ayu, the owner of Ayu Enterprise has decided to convert her business into a company. A new company, Chomel Sdn. Bhd. was formed with capital of ordinary shares to take over all the assets of Ayu Enterprise. Statement of Financial Position as at 1 October 20X3 Capital Net profit Creditors Bank overdraft Building Motor vehicles Inventory Debtors 2. The following assets were to be valued: i. Building to RM170,000 ii. iii. iv. RM 200,000 44,000 244,000 35,000 6,000 285,000 Additional information: 1. Puan Ayu agreed to receive six (6) ordinary shares of RM1 each for every RM5 of her capital and cash of RM57,100 as purchase consideration. 150,000 57,000 40,000 38,000 285,000 Motor vehicles to RM50,000 RM3,000 of the inventory was obsolete and to be written off Doubtful debts to be provided at 5% of debtors. 6. The cost of incorporating Chomel Sdn. Bhd. was RM2,000. 3. The creditors agreed to accept RM34,000 in full settlement of the amount due to them. 4. Chomel Sdn. Bhd. agreed to pay for the cost of winding up of Ayu Enterprise, which amounted to RM1,500. 5. Puan Ayu acquired an additional 100,000 ordinary shares in Chomel Sdn. Bhd. at RM1.20 per share, for which she paid in cash. Required: a) Calculate the goodwill or bargain purchase on business purchase. b) Prepare the journal entries to close the book of Ayu Enterprise c) Prepare the journal entries to open the book of Chomel Sdn. Bhd. d) Prepare the statement of financial position of Chomel Sdn Bhd immediately after the conversion of Ayu Enterprise.

Answer rating: 100% (QA)

a To calculate the goodwill or bargain purchase on business purchase we need to compare the purchase consideration with the net assets acquired Purcha View the full answer