Reference no: EM132982334

On 1 July 2019 Curious Ltd acquired the following assets and liabilities from George Ltd:

                                                   Carrying amount            Fair value

Land                                       $300,000                       $350,000

Equipment (cost $450,000)             $280,000                 $290,000

Inventory                                      $80,000                   $85,000

Cash                                               15,000                    $15,000

Accounts payable                             ($20,000)                      ($20,000)

Loans (non-current)                             ($80,000)                 ($80,000)

In exchange for these assets and liabilities, Curious Ltd issued 90 000 shares that had been issued for $8.50 per share but as at 1 July 2019 had a fair value of $6.50 per share. The issue of the shares cost $500 and the cost of the acquisition was $1,000.

Required

Problem 1: Calculate the goodwill /gain on bargain purchase, show your workings.

Problem 2: Prepare the journal entries in the records of Curious Ltd to account for the acquisition of the assets and liabilities of George Ltd.