On 30 June 2020 Pink Ltd acquired all assets (except for cash) and assumed all liabilities (except fordebentures) of Purple Ltd. At this date, the carrying amounts of assets and liabilities of Purple Ltdwere at fair value and consisted of:$15,00032,00040,000CashAccounts payable$9,000Accounts receivableDebentures (10%)Share capital ($2 shares)Retained earnings40,000Inventory110,000Shares in listed companies90,00048,000Motor Vehicle45,000Accumulated depreciation(15,000)In exchange for these net assets, Pink Ltd agreed to:issue two (2) Pink Ltd shares for every five (5) shares in Purple Ltd.On 30 June 2020 Pink Ltd shares were valued at $5.50provide sufficient additional cash in order for Purple Ltd to payout the debentures (including interest) and liquidation costs of $3,500.Required:Prepare an acquisition analysis for Pink Ltd's acquisition of Purple Ltd.wwww

Acquisition means when one company purchases another company. In other words, when one company holds…

Answered: On 30 June 2020 Pink Ltd acquired all…

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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