Question
On 1 July 2020, Thomas Ltd acquired a parcel of assets and liabilities comprising a business directly from Edison Ltd. The assets and liabilities at
On 1 July 2020, Thomas Ltd acquired a parcel of assets and liabilities comprising a business directly from Edison Ltd. The assets and liabilities at 1 July 2020 were as follows:
Carrying amount ($)
Fair value ($)
Inventory
77 000 96500
Equipment
135 000 210.000
Accounts payable
2 000 2,000
For this acquisition, Thomas Ltd issued 70,000 shares, the fair value of which at the acquisition date was $3.80 each.
Additional information:
Edison Ltd had not recorded an internally developed patent. Thomas Ltd estimated the fair value of this patent to be $18,000.
Required:
Prepare the journal entry in the records of Thomas Ltd to account for the above acquisition.(3 marks)
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