Solution-Prepare blue reef entries to record the acquisition

Prepare blue reef entries to record the acquisition

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Reference no: EM132999693

Question - On January 1, 2018 the fair values of Pink Coral's net assets were as follows:

Accounts Receivables 100,000

Equipment, Net 150,000

Land 50,000

Buildings, Net 300,000

Accounts Payable 80,000

On January 1, 2018, Blue Reef Company purchased the net assets of the Pink Coral Company by issuing 100,000 shares of its £1 par value stock when the fair value of the stock was £6.20. It was further agreed that Blue Reef would pay an additional amount on January 1, 2020, if the average income during the 2-year period of 2018-2019 exceeded £80,000 per year. The expected value of this consideration was calculated as £164,000; the measurement period is one year.

Required - Prepare Blue Reef's entries:

1. On January 1, 2018 to record the acquisition.

2. On August 1, 2018 to revise the contingent consideration to £170,000.

Reference no: EM132999693

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Prepare blue reef entries to record the acquisition

Reference no: EM132999693

Reference no: EM132999693

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