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Prepare the journal entries in the records of big ltd

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Reference no: EM131794596

Problem

On 1st June 2016, Big Ltd acquired the following assets and liabilities of Small Ltd:

                                  Carrying Amount         Fair Value

Land                                $310000                $340000

Plant( cost $400000)         280000                  295000

Inventory                         80000                    85000

Cash                                15000                    15000

Account payable                (20000)                  (20000)

Loans                               (80000)                  (80000)

In exchange for these assets and liabilities, Big Ltd issued 100000 shares that has been issued for $1.20 per shares but at 1 June 2016 had a fair value of $6.10 per share.

Required:

i) Prepare the acquisition analysis

ii) Prepare the journal entries in the records of Big Ltd to account for the acquisition of the assets and liabilities of Small Ltd.

iii) Prepare the journal entries assuming that the fair value of the shares was $7.50 per share

 

Reference no: EM131794596

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