Soy and Tuna are partners in a business which deals in buying and selling fish. They form
Question:
Soy and Tuna are partners in a business which deals in buying and selling fish. They form a company Fishing Ltd to take over their existing partnership as at 1st May 2019.
Fishing Ltd has agreed to pay a total purchase consideration at an amount of $ 400,000 (200,000 $1 in shares being issued and $ 200,000 in cash).
Assets and Liabilities of Soy and Tuna acquired at fair market value are as follows:
ASSETS | |
Accounts Receivables | 240,000 |
Inventory | 160,000 |
Property, Plant and Equipment | 200,000 |
TOTAL ASSETS | 600,000 |
LIABILITIES | |
Accounts Payable | 160,000 |
Loans | 100,000 |
TOTAL LIABILITIES | 260,000 |
NET ASSETS | 340,000 |
You are required to complete the following tasks by adopting AASB 13 Fair Market Valuation and adhering to the organizational accounting policies and procedures applicable to Fishing Ltd listed above.
a-Complete the Journal Entries for the conversion of Soy and Tuna’s business and payment of the purchase consideration.
b-Complete the Balance Sheet for Fishing Ltd as at 1 May 2019
Expert Answer:
