A Ltd agreed to pay B Ltd $6 000 in cash plus 16 000 fully paid shares in A Ltd, these shares having a fair value of $7.5 per share. The business combination was completed and B Ltd went into liquidation. Costs of liquidation amounted to $1 200. • A Ltd incurred accounting and legal costs amounting to $450 in relation to the business combination. • Costs of issuing the A Ltd. shares were $350. On 30 June 2020, B Ltd had reported a contingent liability relating to a guarantee given by that company to another entity. B Ltd did not record the guarantee as a liability because of the difficulty of measuring the liability. The fair value of this contingent liability was assessed as $15 000. . Show Transcribed Text 3 C Required: a) Prepare the acquisition analysis for this business combination. b) Prepare the journal entries in A Ltd to record the business combination.
A Ltd agreed to pay B Ltd $6 000 in cash plus 16 000 fully paid shares in A Ltd, these shares having a fair value of $7.5 per share. The business combination was completed and B Ltd went into liquidation. Costs of liquidation amounted to $1 200. • A Ltd incurred accounting and legal costs amounting to $450 in relation to the business combination. • Costs of issuing the A Ltd. shares were $350. On 30 June 2020, B Ltd had reported a contingent liability relating to a guarantee given by that company to another entity. B Ltd did not record the guarantee as a liability because of the difficulty of measuring the liability. The fair value of this contingent liability was assessed as $15 000. . Show Transcribed Text 3 C Required: a) Prepare the acquisition analysis for this business combination. b) Prepare the journal entries in A Ltd to record the business combination.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
Transcribed Image Text:The financial statements of A Ltd and B Ltd at 1 July 2020 were as follows:
Cash
Plant
Accumulated Depreciation
Inventories
Account Receivable
Goodwill
Total Assets
Accounts Payable
Net Assets
Share Capital
Retained Earnings
General Reserve
Total Equity
A Ltd
$ 25 000
60 000
(15 000)
12 600
20 000
102 600
1800
100 800
90 000
8 800
2 000
100 800
B Ltd
59 000
(12 000)
24 000
36 000
10 000
117 000
17 000
100 000
81 000
4 000
15 000
100 000
Transcribed Image Text:A Ltd agreed to pay B Ltd $6 000 in cash plus 16 000 fully paid shares in A Ltd, these shares
having a fair value of $7.5 per share.
The business combination was completed and B Ltd went into liquidation.
Costs of liquidation amounted to $1 200.
• A Ltd incurred accounting and legal costs amounting to $450 in relation to the business
combination.
• Costs of issuing the A Ltd. shares were $350.
• On 30 June 2020, B Ltd had reported a contingent liability relating to a guarantee given by
that company to another entity. B Ltd did not record the guarantee as a liability because of the
difficulty of measuring the liability. The fair value of this contingent liability was assessed as
$15 000.
Show Transcribed Text
c
Required:
a) Prepare the acquisition analysis for this business combination.
b) Prepare the journal entries in A Ltd to record the business combination.
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