Reference no: EM132839778

Question - Pink Ltd acquired all the assets and liabilities of Sharp Ltd on 1 July 2020. At this date, the assets and liabilities of Sharp Ltd consisted of the following:

Carrying Amount Fair Value

Assets

Cash 400,000 400,000

Accounts receivable 380,000 420,000

Land 400,000 410,000

Vehicle 130,000 90,000

Accumulated depreciation -Vehicle (30,000)

Liabilities

Accounts payable 350,000 350,000

Loans 400,000 400,000

Equity Share Capital - 100 000 shares 500,000

Reserves 30,000

In exchange for these assets and liabilities, Pink Ltd agreed to

Issue 2 Pink Ltd shares for every Sharp Ltd Share - Pink Ltd shares were considered to have a fair value of $2 per share; costs of issue were $700

Transfer a piece of Land to the former shareholders of Sharp Ltd - the Land was carried in the records of Pink Ltd at $300,000 but was considered to have a fair value of $400,000.

Pay $2 per share in cash to each of the former shareholders of Sharp Ltd.

Pink Ltd incurred $2,200 in costs associated with the acquisition of these net assets

A. As per the Acquisition Analysis prepared on 01/07/2020, compute the Goodwill or gain on bargain purchase?

B. What the Journal entry to record value difference in land?

C. What the Journal entry to record costs associated with the acquisition of these net assets?

D. What the Journal entry to record costs of share issue?

E. What the Journal entry to record Goodwill or gain on bargain purchase?