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

96 500

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)

Reminder:

• Please label Dr and Cr sides clearly (otherwise no marks).
• No marks will be awarded for workings/calculations.
• Narration is not required for the entry.
• Please do not create unnecessary space in your answer, as there is a 20-line limit in the answer space.