Financial accounting exercises for intangibles.
A ltd acquired all the assets and liabilities of B ltd on 1 July 2014. At the date of acquisition, the carrying amount of B ltd identifiable net assets and their fair values are listed below.
|
|
Carrying amount
|
Fair values
|
|
Cash
|
20,000
|
20,000
|
|
Account receivable
|
800,000
|
780,000
|
|
Provision for doubtful debts
|
-10,000
|
-5,000
|
|
Inventory
|
1,600,000
|
1,480,000
|
|
Property, plant and equipment
|
2,100,000
|
1,800,000
|
|
Accumulated depreciation PP&E
|
-700,000
|
|
|
Account payable
|
900,000
|
|
|
Provision for long service leave
|
-140,000
|
-190,000
|
In addition, due diligence identified patents that were valued by an expert at $350,000, a customer list at $150,000 and contingent liabilities were reliably measured at $200,000. The price paid was $4,000,000 and did not include the legal costs of the business combination which were $80,000.
Required
Prepare the general journal entries to record the purchase by A Ltd under AASB 3 Business Combinations and the payments to B Ltd. Narrations are not required.