Blue Ray Bhd. acquired all the assets and liabilities of Sharp Bhd. on 1 July 2021. Given below are the statements of financial position of Blue Ray and Sharp Bhd. as at 1 July 2021:     Blue Ray (RM’000) Sharp (RM’000) Non-Current Tangible Assets 400,000 230,000 Goodwill 50,000   Shares in Sharp (30,000) 40,000     490,000 230,000 Current Asset 56,000 36,000 Total Assets 546,000 266,000 Current Liabilities (40,000) (20,000)   506,000 246,000 Ordinary Share capital at RM1 ach 400,000 150,000 Retained Profits 106,000 96,000   506,000 246,000   The acquisition was undertaken under the following terms: Blue Ray agreed to issue 200,000,000 ordinary shares. It was agreed that the fair value of the shares of Blue Ray for the acquisitions is RM1.60. Sharp will go into liquidation. The fair value of the assets and liabilities of Sharp were estimated to be: Tangible Assets                RM250,000,000 Current Assets                  RM36,000,000 Current Liabilities              RM20,000,000   Required:   Calculate the goodwill on acquisition.                                                                                                                     Prepare journal entries to close the books of Sharp Bhd

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Blue Ray Bhd. acquired all the assets and liabilities of Sharp Bhd. on 1 July 2021. Given below are the statements of financial position of Blue Ray and Sharp Bhd. as at 1 July 2021:

 

 

Blue Ray

(RM’000)

Sharp

(RM’000)

Non-Current Tangible Assets

400,000

230,000

Goodwill

50,000

 

Shares in Sharp (30,000)

40,000

 

 

490,000

230,000

Current Asset

56,000

36,000

Total Assets

546,000

266,000

Current Liabilities

(40,000)

(20,000)

 

506,000

246,000

Ordinary Share capital at RM1 ach

400,000

150,000

Retained Profits

106,000

96,000

 

506,000

246,000

 

The acquisition was undertaken under the following terms:

  1. Blue Ray agreed to issue 200,000,000 ordinary shares. It was agreed that the fair value of the shares of Blue Ray for the acquisitions is RM1.60.
  2. Sharp will go into liquidation.
  3. The fair value of the assets and liabilities of Sharp were estimated to be:

Tangible Assets                RM250,000,000

Current Assets                  RM36,000,000

Current Liabilities              RM20,000,000

 

Required:

 

  1. Calculate the goodwill on acquisition.                                                                                                                    
  2. Prepare journal entries to close the books of Sharp Bhd
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