Corporate accounting

week 1 Tea Tree Bay Ltd acquires a Gizmo Machine from letsons Ltd for the following consideration: $20,000 In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100,000. It has a fair value of $140,000. Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of 520,000. The fair value of the equipment is $23,000 Assumption Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd's bank loan of liability of $30,000 as part of the Gizmo Machine acquisition. Other Tea Tree Bay Ltd also spend $5,000 as the installation cost. Testing cost was associated $2,500. Transportation cost for the machine was 5700. costs During rst year of operation, the company paid $650 as the maintenance cost for the machine. Required: a) Calculate the acquisition cost of the Gizmo Machine that will be used as the base for future depreciation charge. (3 marks) bl Provide the journal entries that would appear in Tea Tree Bay Ltd's books to account for the acquisition of the Gizmo Machine. (5 marks) c) Will the maintenance cost be included in the acquisition cost of the machine? Justify your answer. (2 marks, maximum 100 words]