(a) Explain the ways in which a company may expand by obtaining new assets. (1 mark)

(b) Jamuna River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham Pty Ltd. The parcel of assets, measured at net fair value, consisted of:

Balance of Accounts:

Plant

Land

Vehicles

Accounts receivable Accounts payable Total

($)___

150,000 240,000 120,000

30,000 (48,000) 492,000

2

Question 3 (Contd) (7 marks) Required:

Prepare journal entries to record the acquisition by Jamuna River Ltd, assuming that:

(i) The cost of acquisition was $600,000 cash. (3 marks)

(ii) The cost of acquisition was $432,000 cash. (3 marks)

Q