Question

advanced accounting

Note ,, please make sure do it at IFRS ,, then after the investment we should write the journal for investment

With calculate the fair value،، please follow ifrs in calculations

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Prepare the journal entries for the acquiring firm under the fair value (cost)   

John Corporation exchanges 200,000 shares of newly issued $10 par value common stock with a fair market value of $40 per share for all the outstanding $5 par value common stock of Martin Incorporated, which continues on as a legal entity. Fair value approximated book value for all assets and liabilities of Martin. John paid the following costs and expenses related to the business combination:

Registering and issuing securities                   19,000

Accounting and legal fees                             150,000

Salaries of John's employees whose-

time was dedicated to the merger                    86,000

Cost of closing duplicate facilities                223,000

Required:

Prepare the journal entries relating to the above acquisition and payments incurred by John, assuming all costs were paid in cash:

Answer 1

  journal entries

  particular DR CR

business purchase a/c DR 8000000

to liquidater martin a/c 8000000

(being busniess purchase entry due)

assets a/c DR - *

to liabilites a/c -

to bussiness purchase a/c 8000000

(being assets and liabilities purchased)

* since the amount of assetes and liabilities is not given

liquidator martin a/c DR 8000000

to equity share capital a/c 8000000

(being equity shares issued)

goodwil a/c DR 478000*

to bank a/c 478000

(being expences paid by john)

* (19000+150000+86000+223000)