Advanced Financial Accounting

on 1 January 2019 Australian Media Co Ltd acquired all the assets and liabilities of a rival newspaper (Fairprint Ltd). The following information is relevant to Australian Media Co Ltd's purchase: (i) The assets and liabilities of Fairprint Ltd at the date of acquisition consisted of: Plant and equipment 250 000 Accumulated depreciation - Plant and equipment 50 000 Land and buildings 1 500 000 Accumulated depreciation - Buildings 250 000 Inventory 340 000 Accounts receivable 560 000 Accounts payable 230 000 (ii) Australian Media Co Ltd assessed that the assets and liabilities of Fairprint Ltd represent fair values except for the following. Appropriate fair values are estimated to be: Land and buildings Inventory Accounts receivable 1 800 000 250 000 500 000 (iii) (iv) Fairprint Ltd also has an internally generated masthead that is not shown in the accounting records. Australian Media Co Ltd estimates that this patent has a fair value of $50 000. In consideration of the purchase, Australian Media Co Ltd has agreed to transfer 1.5 million shares to the shareholders of Fairprint Ltd. The share price of Australian Media Co Ltd's shares at 1 January 2019 was $1.50. Share issue costs incurred by Australian Media Co Ltd amount to $20 000. In addition, Australian Media Co Ltd agreed to transfer $750 000 cash on 1 January 2020. Australian Media Co Ltd's incremental borrowing rate is 6% and the present value of $1.00 at 6% for 1 year is 0.9434. Legal costs incurred by Australian Media Co Ltd to prepare the sale agreement amount to $10 000. (v) (vi) Required Prepare the journal entries in Australian Media Co Ltd to record the acquisition of Fairprint Ltd (see following page for answer space). Use this space for the acquisition analysis & other calculations. In the space below, prepare general journal entries for Australian Media Co Ltd to record the business acquisition (and associated entries) according to AASB 3 Business Combinations. () Date DR CR