Blue Ray Bhd. acquired all the assets and liabilities of Sharp Bhd. on 1 July 2021. Given below are the statements of financial position of Blue Ray and Sharp Bhd. as at 1 July 2021: Blue Ray (RM’000) Sharp (RM’000) Non-Current Tangible Assets 400,000 230,000 Goodwill 50,000 Shares in Sharp (30,000) 40,000 490,000 230,000 Current Asset 56,000 36,000 Total Assets 546,000 266,000 Current Liabilities (40,000) (20,000) 506,000 246,000 Ordinary Share capital at RM1 ach 400,000 150,000 Retained Profits 106,000 96,000 506,000 246,000 The acquisition was undertaken under the following terms: Blue Ray agreed to issue 200,000,000 ordinary shares. It was agreed that the fair value of the shares of Blue Ray for the acquisitions is RM1.60. Sharp will go into liquidation. The fair value of the assets and liabilities of Sharp were estimated to be: Tangible Assets RM250,000,000 Current Assets RM36,000,000 Current Liabilities RM20,000,000 Required: Calculate the goodwill on acquisition. Prepare journal entries to close the books of Sharp Bhd

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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Blue Ray Bhd. acquired all the assets and liabilities of Sharp Bhd. on 1 July 2021. Given below are the statements of financial position of Blue Ray and Sharp Bhd. as at 1 July 2021:

	*Blue Ray* *(RM’000)*	*Sharp* *(RM’000)*
Non-Current Tangible Assets	400,000	230,000
Goodwill	50,000
Shares in Sharp (30,000)	40,000
	*490,000*	*230,000*
Current Asset	56,000	36,000
Total Assets	546,000	266,000
Current Liabilities	(40,000)	(20,000)
	*506,000*	*246,000*
Ordinary Share capital at RM1 ach	400,000	150,000
Retained Profits	106,000	96,000
	*506,000*	*246,000*

The acquisition was undertaken under the following terms:

Blue Ray agreed to issue 200,000,000 ordinary shares. It was agreed that the fair value of the shares of Blue Ray for the acquisitions is RM1.60.
Sharp will go into liquidation.
The fair value of the assets and liabilities of Sharp were estimated to be:

Tangible Assets RM250,000,000

Current Assets RM36,000,000

Current Liabilities RM20,000,000

Required:

Calculate the goodwill on acquisition.
Prepare journal entries to close the books of Sharp Bhd

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