2 BFA605 - Financial and Corporate Accounting Question 1
2 BFA605 - Financial and Corporate Accounting Question 1
Almonds L t d has been negotiating with Raisons L t d to buy its wholefood
section. The purchase takes place on 1^* July 2014. The wholefood section is
considered a Cash Generating Unit and the purchased Assets and Liabilities,
at their carrying amounts and at the fair values estimated by Almonds L t d is
shown below.
Item Accounts receivable
Land and buildings
Plant & Equipment
Patent
Accounts payable Cost Accumulated
depreciation/
amortisation $
120,000
500,000
470,000
50,000
110,000 Carrying
amount $
250,000
370,000 120,000
250,000
100,000
50,000
110,000 Fair
value $
118,000
300,000
80,000
65,000
110,000 Included i n the purchases by Almonds L t d was an identifiable intangible
asset of a Trademark developed over the years by Raisons L t d . The
Trademark has a fair value of $150,000.
The purchase consideration for the business consisted of 500,000 $2 ordinary
shares in Almonds Ltd, paid to $1.20 and $100,000 in cash to be paid half now
and half in one year's time. The discount rate is 10% and the Present Value
tables are shown on page 9.
Almond L t d incurred legal fees of $2,500 to process the purchase of the
wholefood section and $1,500 of direct costs to issue the shares. Required:
Prepare the journal entries to record the purchase by Almonds L t d and the
total payment to Raisons Ltd.
Narrations are not required
[Total for Question 1 = 15 marks]
Attachments:
Answers
Status NEW
Posted 20 Jun 2017 03:06 AM
My Price 15.00
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Attachments
file 1497929930-Solutions file.docx preview (56 words )
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