Trump Ltd acquired all the assets and liabilities of Bush Ltd on 30 June 2020. The purchase consideration was as follows: $1,000,000 in cash paid on acquisition date Two shares in Trump Ltd for every one share in Bush Ltd. Bush Ltd has 2,000,000 shares on issue at 30 June 2020. At 30 June 2013 Trump Ltd shares were quoted on the ASX at $2.50 per share. A deferred payment of $500,000 to be paid on 30 June 2014.Trump Ltd's cost of capital is 7% which represents a one period present value factor of 0.9346 Should the price of Trump Ltd shares fall below $2.50 in the six months following the scquisition Trump Ltd is required to pay a cash contingent consideration. It is estimated that there is a 60% probability that the share price will fall to $2.45 in this period. Other information Trump Ltd incurred legal and other costs associated with the acquisition of $10,000 Trump Ltd incurred share issue costs of $4,000 The assets and liabilities acquired from Bush Ltd are as follows: Accounts Receivable Inventory Property Plant and Equipment Accounts Payable Provision for Employee Benefits Bush Ltd Carrying amount 760 000 1 300 000 8 680 000 (680 000) (170 000) Fair Valve 720 000 1440 000 9500 000 (680 000) (220 000) In addition Bush Ltd has contingent liabilities of $40,000 at the acquisition date. Required: a) Prepare an acquisition analysis for Trump Ltd's acquisition of the net assets of Bush Lid b) Prepare the journal entries to record the acquisition in the books of Trump Ltd c) Prepare the journal entry in the books of Trump Ltd if Trump Ltd had purchased all the issued shares of Bush Lid by issuing 5,000,000 shares in Trump Ltd at an issue price of $2.50 per share. Trump Ltd acquired all the assets and liabilities of Bush Ltd on 30 June 2020. The purchase consideration was as follows: $1,000,000 in cash paid on acquisition date Two shares in Trump Ltd for every one share in Bush Ltd. Bush Ltd has 2,000,000 shares on issue at 30 June 2020. At 30 June 2013 Trump Ltd shares were quoted on the ASX at $2.50 per share. A deferred payment of $500,000 to be paid on 30 June 2014.Trump Ltd's cost of capital is 7% which represents a one period present value factor of 0.9346 Should the price of Trump Ltd shares fall below $2.50 in the six months following the scquisition Trump Ltd is required to pay a cash contingent consideration. It is estimated that there is a 60% probability that the share price will fall to $2.45 in this period. Other information Trump Ltd incurred legal and other costs associated with the acquisition of $10,000 Trump Ltd incurred share issue costs of $4,000 The assets and liabilities acquired from Bush Ltd are as follows: Accounts Receivable Inventory Property Plant and Equipment Accounts Payable Provision for Employee Benefits Bush Ltd Carrying amount 760 000 1 300 000 8 680 000 (680 000) (170 000) Fair Valve 720 000 1440 000 9500 000 (680 000) (220 000) In addition Bush Ltd has contingent liabilities of $40,000 at the acquisition date. Required: a) Prepare an acquisition analysis for Trump Ltd's acquisition of the net assets of Bush Lid b) Prepare the journal entries to record the acquisition in the books of Trump Ltd c) Prepare the journal entry in the books of Trump Ltd if Trump Ltd had purchased all the issued shares of Bush Lid by issuing 5,000,000 shares in Trump Ltd at an issue price of $2.50 per share
