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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: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
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.
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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