Question

Swan River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham...

Swan River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham Pty Ltd. The parcel, measured at net fair values, consisted of:

Balance of Accounts:

Plant 50,000

Land 80,000

Vehicles 40,000

Accounts receivable 10,000

Accounts payable (16,000)

Total 164,000

Required:

Prepare journal entries to record the acquisition by Swan River Ltd, assuming that:

a) The cost of acquisition was $200,000 cash.

b) The cost of acquisition was $144,000 cash.

Homework Answers

Answer #1
a) General Journal Debit Credit
Plant     50,000
Land     80,000
Vehicles     40,000
Accounts receivable     10,000
Goodwill     36,000
Accounts payable     16,000
Cash 200,000
b) General Journal Debit Credit
Plant     50,000
Land     80,000
Vehicles     40,000
Accounts receivable     10,000
Gain on Acquisition     20,000
Accounts payable     16,000
Cash 144,000
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