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Question - Sacura Ltd acquired all assets and liabilities of Vendetta Ltd on 30 June 2020. The carrying amount and fair value of assets and liabilities taken over are as follows:
Carrying Amount
Fair Value
Accounts Receivable
988,000
936,000
Inventory
1,690,000
1,872,000
PPE
2,184,000
2,028,000
Accounts Payable
884,000
Provision for Employee Benefits
221,000
286,000
In addition, due diligence identified the existence of a Trademarks that was valued by an expert at $650,000. The due diligence process also uncovered contingent liabilities (Guarantee Payable) that were measured at $130,000.
The consideration paid was $6,240,000.
Required -
a. Calculate the amount of goodwill / bargain on purchase that would be recorded in the books of Sacura Ltd following the acquisition of Vendetta Ltd. Show all workings.
b. Record the journal entries for Sacura Ltd at acquisition date.
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