Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mervax Ltd acquired all assets and liabilities of Honsoon Ltd on 30 June 2020. The carrying amount and fair value of assets and liabilities taken

Mervax Ltd acquired all assets and liabilities of Honsoon Ltd on 30 June 2020. The carrying amount and fair value of assets and liabilities taken over are as follows:

Carrying amount ($)

Fair value ($)

Assets

Cash

15,000

15,000

Accounts Receivables (Net)

900,000

950,000

Inventory

1,000,000

1,200,000

Property, Plant and Equipment (Net)

4,000,000

6,000,000

Liabilities

Accounts payable

200,000

200,000

Provision for employee benefits

100,000

100,000

In addition, due diligence identified the existence of a brand names that was valued by an expert at $120,000. The due diligence process also uncovered contingent liabilities (Guarantee Payable) that were measured at $40,000.

The consideration paid was $7,500,000.

Record the journal entries for Mervax Ltd at acquisition date

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby

1st Canadian Edition

0070891737, 978-0070891739

More Books

Students also viewed these Accounting questions

Question

Is there any formal training for teaching?

Answered: 1 week ago

Question

How satisfied are you with this attitude?

Answered: 1 week ago

Question

Where is your key public located geographically?

Answered: 1 week ago

Question

What is the socioeconomic status of your key public?

Answered: 1 week ago