prepare acquisition analysis of the acquisition and prepare journal entries to record the acquisition.

Question 7 Sugar Ltd is looking to expand its share of the market in confectionaries and has negotiated to acquire the operations of Lollipop Ltd on 1 July 2015 Total: 10 marks At 1 July 2015 the Statement of Financial Position for Lollipop Ltd was as follows: Cash Accounts receivable Inventory Land and buildings (net) Piant and equipment (net) 20,400 42,600 60,000 124,000 210000 457.000 $ 80,000 Accounts payable Mortgage loan Share capital ($2 ordinary shares fully paid) Retained earnings 60,000 300,000 17.000 457.00 Question 7 continued on the next page Question 7 continued AUSTRALIA Sugar Ltd is to acquire all assets (except cash) of Lollpop Ltd. Lollipop Ltd will go into liquidation after it pays all of its creditors. The net assets of Lolilipop Ltd are recorded at fair value except for the following Inventory Land and Buildings Fair Value S 52,000 150,000 In exchange, the shareholders of Lolipop Ltd are to receive, for every three Lolipop Ltd shares held, one Sugar Ltd share worth $6 each. Additionally, Sugar Ltd will transfer to Lollipop Ltd its patent which has a fair value of $50,000 (and is recorded at this fair value in Sugar Ltd accounts) Sugar Ltd wilalso give Lolipop Ltd sufficient addtional cash to enable Lollpop Ltd to pay all its liabilities Required: (7 marks) a) Prepare an acquisition analysis of the above acquisition. b) Prepare the journal entries to record the acquisition in the records of Sugar Ltd