This scenario applies to Questions 9-13. The facts will be repeatedly displayed over each question. The assets and liabilities of Bosley Ltd on 1 July 2020 are as follows:

Book value	Fair value
Asset
Account receivable	20000	5000
Building	50000	45000
Land	80000	90000
Liabilities
Loan	29800	29800

On 1 July 2020, Townsend Ltd agrees to pay the following items of consideration to Bosley Ltd in exchange for acquiring all its assets and assuming all its liabilities:

A $30,000 in cash, half of which is paid on the acquisition date, the other half to be paid on 1 July 2021;

B 40,000 newly-issued ordinary shares in Townsend Ltd at the face value of $1.00 per share. These shares are trading at $1.56 per share on the acquisition date.

C A patent which is not recorded in the acquirer's balance sheet but has a current market value of $18,000.

Townsend Ltd's marginal cost of capital is 8% per annum. The company tax rate is 30%.

Assuming that this transaction constitutes a business combination, calculate the Goodwill or Gain on Bargain Purchase under AASB 3:
Instructions:

A In the first blank space below, indicate whether there is a goodwill or a gain on bargain purchase. If you have calculated a goodwill, enter "goodwill0; if you have calculated a gain on bargain purchase, enter "gain" The answer must be entered in lower case (no CAPITAL letters). Do NOT include any space or punctuation.

B In the second blank space below, enter the absolute amount of the goodwill/gain. The number must be rounded to the nearest whole dollar. Do NOT enter any comma (,) dollar sign ($), space, or any other punctuation: e.g., if your answer is $100,000.20 (whether it is a goodwill

OR gain), you must enter it as: 100000
There is a________________(enter “goodwill” or “gain”) of the amount of $________________.

Which of the following may form a part of the correct journal entries recorded by Townsend Ltd in relation to this transaction?

A Dr Investment in Bosley Ltd 62400 B Dr Building 45000
C Dr Loan 29800
D Dr Land 80000

Which of the following may form a part of the correct journal entries recorded by Townsend Ltd in relation to this transaction? Select all that apply (there may be one or more correct answer/s).

A Dr Accounts Receivables 5000 B Dr Land 90000
C Dr Building 50000
D Cr Loan 29800

Which of the following may form a part of the correct journal entries recorded by Townsend Ltd in relation to this transaction? Select all that apply (there may be one or more correct answer/s).

A Cr Allowance for Doubtful Debts 15000

B Cr Patent 18000
C Cr Deferred Consideration Payable 15000

D Cr Cash 30000

Answer rating: 100% (QA)

Answer Q9 There is a enter goodwill or gain of the amount of Based on the information provided the consideration paid by Townsend Ltd is greater than the fair value of the net identifiable assets acqu... View the full answer