On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200. The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying Amount ($) Fair Value ($) Assets Cash 2,000 2,000 Accounts receivable 10,000 10,000 Inventory 64,000 68,000 Equipment 320,000 232,000 Accumulated depn - Equipment (96,000) - Patents 280,000 280,000 Liabilities Accounts payable (16,000) (16,000) Debentures (64,000) (64,000) Required: a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd. b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.
On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets
and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per
share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition
of Pitt Ltd amounted to $1,200.
The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:
Carrying Amount ($) Fair Value ($)
Assets
Cash 2,000 2,000
Inventory 64,000 68,000
Equipment 320,000 232,000
Accumulated depn - Equipment (96,000) -
Patents 280,000 280,000
Liabilities
Accounts payable (16,000) (16,000)
Debentures (64,000) (64,000)
Required:
a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.
b) Prepare the
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