Question: TXA Ltd acquired a machine from Blue Ltd for the following consideration: Cash $70, 000 Land in the books of TXA Ltd the land is

TXA Ltd acquired a machine from Blue Ltd for the following consideration:

  • Cash $70, 000
  • Land in the books of TXA Ltd the land is recorded at its cost of $650,000.
  • It has a fair value of $450,000.
  • TXA Ltd also agrees to assume the liability of the Blue Ltd bank loan of $89,000 as part of the machine acquisition.
  • Required:
  1. (a)Calculate the acquisition cost of the machine. (2 marks)
  2. (b)Provide the journal entries that would appear in TXALtd.'sbooks to account for the acquisitionof the Machine. (8 marks)

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