Solution-Calculate the amount of goodwill-bargain purchase

Calculate the amount of goodwill-bargain purchase

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Reference no: EM132996303

Problem - Bella Ltd acquired 90% of the share capital of Edward Ltd on 1 January 20x7. At that time, the fair values of Edward Ltd's net assets were as follows:

	$
Land	90,000
Equipment	30,000
Accounts receivable	25,000
Accounts payable	28,000

On January 20x7, the share capital of Edward Ltd consisted of 100,000 ordinary shares issued for $1 each and fully paid.

The cost of acquisition under the takeover scheme consisted of 90c cash plus one share in Bella for every share acquired from Edward. Bella's shares were trading at $1.20 each on the ASX (Australian Securities Exchange).

Required -

(a) Calculate the amount of goodwill/bargain purchase (if any) for the above acquisition.

(b) Prepare the journal entry for Bella Ltd for the above acquisition. Narrations are not required.

Reference no: EM132996303

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Calculate the amount of goodwill-bargain purchase

Reference no: EM132996303

Reference no: EM132996303

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