Financial accounting exercises for intangibles.

A ltd acquired all the assets and liabilities of B ltd on 1 July 2014. At the date of acquisition, the carrying amount of B ltd identifiable net assets and their fair values are listed below.

Carrying amount Fair values Cash 20,000 20,000 Account receivable 800,000 780,000 Provision for doubtful debts -10,000 -5,000 Inventory 1,600,000 1,480,000 Property,plant and equipment 2,100,000 1,800,000 Accumulated depreciation PP&E -700,000 Account payable -900,000 Provision for long service leave -140,000 -190,000

In addition, due diligence identified patents that were valued by an expert at $350,000, a customer list at $150,000 and contingent liabilities were reliably measured at $200,000. The price paid was $4,000,000 and did not include the legal costs of the business combination which were $80,000.

Required

Prepare the general journal entries to record the purchase by A Ltd under AASB 3 Business Combinations and the payment to B Ltd. Narrations are not required.

A ltd acquired all the assets and liabilities of B ltd on 1 July 2014. At the date of acquisition, the carrying amount of B ltd identifiable net assets and their fair values are listed below. In addition, due diligence identified patents that were valued by an expert at $350,000, a customer list at $150,000 and contingent liabilities were reliably measured at $200,000. The price paid was $4,000,000 and did not include the legal costs of the business combination which were $80,000. Required Prepare the general journal entries to record the purchase by A Ltd under AASB 3 Business Combinations and the payment to B Ltd. Narrations are not required.