Tutorial Solutions Week 12 - ACCY200 FINANCIAL ACCOUNTING...

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ACCY200 FINANCIAL ACCOUNTING IIA SPRING 2009 WEEK 12 TUTORIAL SOLUTIONS: LEO Chapter 8 Practice question 8.4, 8.5, 8.10, and 8.14. QUESTION 8.4 LOWER LTD – HIGHER LTD (a) FV of shares is $1.80 per share Net fair value of identifiable assets, liabilities and contingent liabilities acquired: Equipment $50 000 Land 80 000 Trucks 40 000 Current assets 10 000 180 000 Current liabilities 16 000 $164 000 Cost of the combination Shares: 100 000 x $1.80 $180 000 Goodwill = $180 000 - $164 000 $16 000 Journal entries: Lower Ltd Equipment Dr 50 000 Land Dr 80 000 Trucks Dr 40 000 Current assets Dr 10 000 Goodwill Dr 16 000 Current liabilities Cr 16 000 Share Capital Cr 180 000 (Acquisition of assets and liabilities of Higher Ltd) (b) FV of shares is $1.60 per share Net fair value of net assets acquired $164 000 Consideration transferred Shares: 100 000 x $1.60 $160 000 Gain on bargain purchase = $164 000 - $160 000 $4 000 Journal entries: Lower Ltd Equipment Dr 50 000 Land Dr 80 000 Trucks Dr 40 000 Current assets Dr 10 000 Current liabilities Cr 16 000 Gain on bargain purchase Cr 4 000 Share capital Cr 160 000 (Acquisition of assets & liabilities of Higher Ltd)
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QUESTION 8.5 HAMILTON LTD – DAYDREAM LTD Journal entries: Daydream Ltd Liquidation Dr 1 000 Liquidation costs payable Cr 1 000 (Costs of liquidation) Liquidation costs payable Dr 1 000 Cash Cr 1 000 (Payment of costs) Liquidation account Dr 399 000 Cash Cr 9 000 Accounts receivable Cr 20 000 Land Cr 80 000 Plant Cr 240 000 Vehicles Cr 50 000 (Transfer of assets sold to liquidation account) Accounts payable Dr 40 000 Loans Dr 60 000 Liquidation
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This note was uploaded on 12/13/2010 for the course ACCY 201 taught by Professor Kevin during the Three '09 term at University of Wollongong, Australia.

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Tutorial Solutions Week 12 - ACCY200 FINANCIAL ACCOUNTING...

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