A Ltd agreed to pay B Ltd $6 000 in cash plus 16 000 fully paid shares in A Ltd, these shares having a fair value of $7.5 per share. The business combination was completed and B Ltd went into liquidation. Costs of liquidation amounted to $1 200. • A Ltd incurred accounting and legal costs amounting to $450 in relation to the business combination. • Costs of issuing the A Ltd. shares were $350. On 30 June 2020, B Ltd had reported a contingent liability relating to a guarantee given by that company to another entity. B Ltd did not record the guarantee as a liability because of the difficulty of measuring the liability. The fair value of this contingent liability was assessed as $15 000. . Show Transcribed Text 3 C Required: a) Prepare the acquisition analysis for this business combination. b) Prepare the journal entries in A Ltd to record the business combination.
A Ltd agreed to pay B Ltd $6 000 in cash plus 16 000 fully paid shares in A Ltd, these shares having a fair value of $7.5 per share. The business combination was completed and B Ltd went into liquidation. Costs of liquidation amounted to $1 200. • A Ltd incurred accounting and legal costs amounting to $450 in relation to the business combination. • Costs of issuing the A Ltd. shares were $350. On 30 June 2020, B Ltd had reported a contingent liability relating to a guarantee given by that company to another entity. B Ltd did not record the guarantee as a liability because of the difficulty of measuring the liability. The fair value of this contingent liability was assessed as $15 000. . Show Transcribed Text 3 C Required: a) Prepare the acquisition analysis for this business combination. b) Prepare the journal entries in A Ltd to record the business combination.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 4MCQ
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