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On 1 July 2020, Sydney Ltd took control of the assets and liabilities of Perth Ltd....

On 1 July 2020, Sydney Ltd took control of the assets and liabilities of Perth Ltd. At this date the statement of financial position of Perth Ltd was as follows:

                                                                                                        Carrying amount        Fair value

         Machinery                                                                                            $40,000         $67,000

         Fixtures & fittings                                                                                  60,000         68,000

         Vehicles                                                                                                  35,000         35,000

         Current assets                                                                                       10,000         12,000

         Current liabilities                                                                                 (16,000)         (18,000)

         Total net assets                                                                                $129,000

         Share capital (80 000 shares at $1.00 per share)                           80,000

         General reserve                                                                                    20,000

         Retained earnings                                                                                29,000

         Total equity                                                                                        $129,000

Prepare the journal entries in the records of Sydney Ltd at 1 July 2020 in the following situation, assuming the costs of issuing the shares by Sydney Ltd cost $1,600.

  1. Sydney Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Perth Ltd
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