Question
Victoria Ltd purchased from Albert Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Victoria Ltd
Victoria Ltd purchased from Albert Ltd the following parcel of assets and liabilities representing a business. In exchange for these assets and liabilities, Victoria Ltd issued 50 000 shares, and the fair value of each share at the acquisition date is $5.50. Cost of issuing shares were $5 000. Legal costs associated with the acquisition amounted to $3 000. After the transaction, Albert Ltd continued in business otherwise unaffected.
Cost | Carrying amount | Fair value | |
Accounts receivable | 20 000 | 18 500 | 16 000 |
Machinery | 120 000 | 100 000 | 86 000 |
Accounts payable | 22 000 | 22 000 | 22 000 |
Additional information:
Victoria Ltd recognised the brand ‘Bert’ that was not recognised in the record of Albert Ltd as it was an internally developed brand. It was calculated that this brand had a fair value of $105 000.
Required:
Prepare all necessary journal entries to record the above acquisition.
Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required. 3) The template should provide enough space. However, if you find the space is insufficient in the template or encounter a table formatting issue, write your journal entries below the template, and ensure labelling DR or CR.
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