On 1 July 2019, Frewville Ltd acquired the assets and liabilities of Glenunga Ltd. The assets and liabilities of Glenunga Ltd consisted of the following.

In exchange for the business of Glenunga Ltd, Frewville Ltd provided the following to Glenunga Ltd:

• 400 000 shares in Frewville Ltd, these having a fair value of $2.00 per share 

• cash of $360 000.

The acquisition went ahead as planned. The plant acquired was considered by Frewville Ltd to have a further 10‐year life with benefits being received evenly over that period; the furniture had an expected life of 5 years.

During the first year after the acquisition, the management of Frewville Ltd decided to measure, at 30 June 2020, the plant at fair value (both plant assets being in the same class) and the furniture at cost.

At 30 June 2020, Frewville Ltd assessed the fair values of its assets.

• Plant A was valued at $552 000, with an expected remaining useful life of 8 years.

• Plant B was valued at $320 000, with an expected remaining useful life of 8 years.

At 30 June 2020, the furniture’s recoverable amount was assessed to be $70 000, with an expected useful life of 4 years.

Required

Prepare the journal entries in the records of Frewville Ltd for the year ending 30 June 2020.

Transcribed Image Text:

Plant A (cost $840 000) Plant B (cost $680000) Furniture (cost $160000) Land Liabilities Carrying amount $ 620 000 362 000 120 000 200 000 (300 000) Fair value $ 600 000 350 000 100 000 260 000 (300 000)