Question

On 1 July 2020, Harper Ltd acquired all of the assets and liabilities, which constitutes a business, from Jerry Ltd, except for cash and income tax payable. In exchange for the net assets, Harper Ltd agreed to: - issued 100,000 new shares in Harper Ltd to Jerry Ltd. On 1 July 2020, Harper Ltd’s shares were traded on the Australian Securities Exchange at $3.80 per share. - pay Jerry Ltd $80,000 on 1 July 2020 - transfer an item of equipment, which has a carrying amount of $35,000 in Harper Ltd’s financial statements at 1 July 2020, but is considered to have a fair value of $78,000 on the same date. The total consideration transferred from Harper Ltd to Jerry Ltd is: $538,000 $196,000 $503,000 $495,000

Answer 1

The calculation of consideration from Haper Ltd to Jerry Ltd for the transactions on 01st july 2020 is as follows:

S.No	Particulars	Calculation	Amount (Aus$)
1	1,00,000 Shares of Harper Ltd	=1,00,000 shares*Aud$3.80/-(Market value of share)	3,80,000
2	Transfer of amount to Jerry Ltd	given in question	80,000
3	Transfer of Equipment	Out of carrying amount and fair value, we have to consider fair value only as it is the existing market value on that date i.e: 1st july 2020	78,000
Total Consideration	5,38,000

So the answer is the 1st option AUD$.538,000/-.