Pant Ltd, a supplier of cricket bats and equipment, agreed to acquire the business of a...

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Pant Ltd, a supplier of cricket bats and equipment, agreed to acquire the business of a rival company, Lyon Ltd, taking over all assets and liabilities as at 1 December 2020. The prK2 agreed on was $400,000, payable $300,000 in cash and the balance by the issue to the selling company of 100,000 fully paid shares in Pant Ltd, these shares having a fair value of $1.00 per share. The trial balances of the two companies on 1 December 2020 were as follows. Pant Lyon Dr Cr Dr Cr Share capital 3,000,000 450,000 Retained earnings 960,000 175,000 Accounts payable 185,000 225,000 Cash 520,000 53,000 Equipment (net) 1,450,000 180,000 Inventory 715,000 155,000 Accounts receivable 760,000 67,000 Borrowings 700,000 Goodwill 45,000 4,145,000 4,145,000 675,000 675,000 All the identifiable net assets of Lyon Ltd were recorded by Lyon Ltd at fair value except for the inventories, which were considered to be worth $190,000 (assume no tax effect). The plant had an expected remaining life of 5 years. The business combination was completed and Lyon Ltd went into liquidation. Pant Ltd incurred incidental costs of $4,000 in relation to the acquisition. Costs of issuing shares in Pant Ltd were $6,000. Required a. Prepare the acquisition analysis for Pant Limited (10 marks) b. Prepare the journal entries in the records of Pant Ltd to record the business combination. (10 marks) Pant Ltd, a supplier of cricket bats and equipment, agreed to acquire the business of a rival company, Lyon Ltd, taking over all assets and liabilities as at 1 December 2020. The prK2 agreed on was $400,000, payable $300,000 in cash and the balance by the issue to the selling company of 100,000 fully paid shares in Pant Ltd, these shares having a fair value of $1.00 per share. The trial balances of the two companies on 1 December 2020 were as follows. Pant Lyon Dr Cr Dr Cr Share capital 3,000,000 450,000 Retained earnings 960,000 175,000 Accounts payable 185,000 225,000 Cash 520,000 53,000 Equipment (net) 1,450,000 180,000 Inventory 715,000 155,000 Accounts receivable 760,000 67,000 Borrowings 700,000 Goodwill 45,000 4,145,000 4,145,000 675,000 675,000 All the identifiable net assets of Lyon Ltd were recorded by Lyon Ltd at fair value except for the inventories, which were considered to be worth $190,000 (assume no tax effect). The plant had an expected remaining life of 5 years. The business combination was completed and Lyon Ltd went into liquidation. Pant Ltd incurred incidental costs of $4,000 in relation to the acquisition. Costs of issuing shares in Pant Ltd were $6,000. Required a. Prepare the acquisition analysis for Pant Limited (10 marks) b. Prepare the journal entries in the records of Pant Ltd to record the business combination. (10 marks)