• Application & Analysis Exercise 25.10 (amended)

Blink Ltd is seeking to expand its share of the mens products market and has negotiated to acquire the operations of Weeping Ltd

At 1 July 2023, the trial balances of the two companies were as follows.

Blink Ltd is to acquire all assets (except Cash and Shares in listed companies) of Weeping Ltd. Acquisition-related costs are expected to be $7 600.

The net assets of Weeping Ltd are recorded at fair value except for the following.

	Carrying amount $	Fair value $
Inventories	30000	26 000
Land and Buildings	40000	80 000
Shares in Listed Companies	22000	18000
Accounts Payable	(40000)	(49 100)
Accrued Leave	0	(29 700)

In exchange, the shareholders of Weeping Ltd are to receive, for every three Weeping Ltd shares held, one Blink Ltd share worth $2.50 each. Costs to issue these shares are $950. Additionally, Blink Ltd will transfer to Weeping Ltd its Shares in Listed Companies asset, which has a fair value of $15000.

Blink Ltd will also give Weeping Ltd sufficient additional cash to enable Weeping Ltd to pay all its creditors and liquidation costs of $8 700.

Required:

Prepare the acquisition analysis and journal entries to record the acquisition of Weeping Ltd in the records of Blink Ltd.

Blink Ltd Weeping Ltd $ $ 145 000 5 200 34 000 21 300 30 000 Cash Accounts receivable Inventories Shares in listed companies Land and buildings (net) Plant and equipment (net) Goodwill (net) 56 000 16 000 22 000 70 000 40 000 130 000 105 000 6 000 5 000 457 000 228 500 65 000 40 000 Accounts payable Bank overdraft 0 0 50 000 Debentures 0 Mortgage loan 100 000 30 000 150 000 Contributed equity: Ordinary shares of $1, fully paid Other reserves Retained earnings (30/6/23) 200 000 15 000 6 500 27 000 2 000 457 000 228 500