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Accounting by an acquirer ★ LO6 On 1 July 2023, Sonic Ltd acquired the following assets...

Accounting by an acquirer ★

LO6 On 1 July 2023, Sonic Ltd acquired the following assets and liabilities from Screwdriver Ltd.

Carrying amount Fair value

Land $600 000 $700 000

Plant (cost $800 000) 560 000 580 000

Inventories 160 000 170 000

Cash 30 000 30 000

Accounts payable (40 000) (40 000)

Loans (160 000) (160 000)

In exchange for these assets and liabilities, Sonic Ltd issued 200 000 shares that had been issued for $2.20 per share but at 1 July 2023 had a fair value of $4.50 per share.

Required: Prepare the journal entries in the records of Sonic Ltd to account for the acquisition of the assets and liabilities of Screwdriver Ltd. Prepare the journal entries assuming that the fair value of Sonic Ltd shares was $4 per share.

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