Question $3$

Question $3$

Accounting for Business Combination

$15$ Marks

Sun Ltd acquired Moon Ltd$\text{'}$s net assets for $K310000.$ The assets acquired at fair value are listed below.

$\backslash$table$[[,$K$],[$Accounts receivable,$34700],[$Inventory$,39000],[$Freehold land,$130000],[$Buildings$,40000],[$Plant and equipment,$46000]]$

The purchase consideration was settled in by paying cash and issuing $40000$ shares. The market value per share of Sun Ltd on this date was K $3\mathrm{.}20.$

Required:

$($a$)$ Prepare the acquisition analysis.

$($b$)$ Prepare general journal entries in Sun Ltd$\text{'}$s books.