Thomas Ltd purchased from Edison Ltd the following parcel of assets and liabilities representing a business....
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Thomas Ltd purchased from Edison Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Thomas Ltd issued 50,000 shares, and the fair value of each share at the acquisition date is $2.20. After the transaction, Edison Ltd continued in business otherwise unaffected. Cost ($) Carrying amount (S) Fair value ($) Accounts receivable 10 000 7 000 8 000 Machinery 40 000 30 000 35 000 Accounts payable 3 000 3 000 3 000 Additional information: Edison Ltd had not recorded an internally generated trademark. Thomas Ltd estimated the fair value of this trademark to be $60,000. Required: a) Prepare all necessary journal entries to record the above acquisition. (Using the provided journal entry template to enter your answer; workings/calculations or narrations are NOT required.) b) If the parcel of assets and liabilities does not represent a business, list any accounts that would be recorded in a) but should not be recognized anymore in Thomas Ltd's record. Explain the reason. Thomas Ltd purchased from Edison Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Thomas Ltd issued 50,000 shares, and the fair value of each share at the acquisition date is $2.20. After the transaction, Edison Ltd continued in business otherwise unaffected. Cost ($) Carrying amount (S) Fair value ($) Accounts receivable 10 000 7 000 8 000 Machinery 40 000 30 000 35 000 Accounts payable 3 000 3 000 3 000 Additional information: Edison Ltd had not recorded an internally generated trademark. Thomas Ltd estimated the fair value of this trademark to be $60,000. Required: a) Prepare all necessary journal entries to record the above acquisition. (Using the provided journal entry template to enter your answer; workings/calculations or narrations are NOT required.) b) If the parcel of assets and liabilities does not represent a business, list any accounts that would be recorded in a) but should not be recognized anymore in Thomas Ltd's record. Explain the reason.
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Date Particulars Dr Cr xx Accounts Receivables 8000 Machinery 3500... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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