Accounting Victoria Ltd purchased from Albert Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Victoria Ltd issued 50 000 shares, and the fair value of each share at the acquisition date is $5.50. After the transaction, Albert Ltd continued in business otherwise unaffected. Victoria Ltd recognised the brand ‘Bert’ that was not recognised in the record of Albert Ltd as it was an internally developed brand. It was calculated that this brand had a fair value of $110 000. Cost Carrying amount Fair value Accounts receivable 20 000 18 500 15 000 Machinery 120 000 100 000 86 000 Accounts payable 22 000 22 000 22 000 Additional information: Victoria Ltd also purchased all the share capital of Edward Ltd in the same financial year. Edward has 100 000 shares outstanding, and its net assets were at fair value. The cost of acquisition for Edward was $1 cash plus one share in Victoria for every one share in Edward. Victoria shares were trading at $3 and Edward shares were trading at $6.60 on the ASX. Required: Prepare all necessary journal entries to record the above TWO acquisitions. Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required. 3) The template should provide enough space. However, if you find the space is insufficient in the template or encounter a table formatting issue, write your journal entries below the template, and ensure labelling DR or CR.
Accounting
Victoria Ltd purchased from Albert Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Victoria Ltd issued 50 000 shares, and the fair value of each share at the acquisition date is $5.50. After the transaction, Albert Ltd continued in business otherwise unaffected. Victoria Ltd recognised the brand ‘Bert’ that was not recognised in the record of Albert Ltd as it was an internally developed brand. It was calculated that this brand had a fair value of $110 000.
|
Cost |
Carrying amount |
Fair value |
|
|
|
20 000 |
18 500 |
15 000 |
|
Machinery |
120 000 |
100 000 |
86 000 |
|
Accounts payable |
22 000 |
22 000 |
22 000 |
Additional information:
Victoria Ltd also purchased all the share capital of Edward Ltd in the same financial year. Edward has 100 000 shares outstanding, and its net assets were at fair value. The cost of acquisition for Edward was $1 cash plus one share in Victoria for every one share in Edward. Victoria shares were trading at $3 and Edward shares were trading at $6.60 on the ASX.
Required:
Prepare all necessary journal entries to record the above TWO acquisitions.
Note 1) Use the provided
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