Topic06_SeminarQuestions - Week 4 11 Jan. (DM) Lecture...

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1 | Page Week 4 11 Jan. (DM) Lecture Topic 6 Business Combinations and Impairment • Identify various forms of business combination • Explain the acquisition method of accounting • Recognise assets acquired and liabilities assumed • Explain impairment testing and meaning of recoverable amount • Identify a cash generating unit CGU • Determine the allocation of an impairment loss to assets in the CGU and record necessary journal entries Seminar Questions: Picker, Chapters 12 & 13 Problem 12.1
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2 | Page Problem 12.1 Accounting for a business combination by both the acquirer and the acquiree ELIZABETH LTD – FRENCH LTD A(1) Assuming the fair value of “A” ordinary shares was $2 per share Acquisition analysis Net fair value of identifiable assets and liabilities acquired = $22 000 (inventory) + $34 000 (land and buildings) + $27 000 (plant and machinery) = $83 000 Consideration transferred = 40 000 x $2.00 = $80 000 Gain on bargain purchase = $3 000 Journal entries: Inventory
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This note was uploaded on 01/19/2012 for the course ACCT 2542 taught by Professor Knapp during the Three '11 term at University of New South Wales.

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Topic06_SeminarQuestions - Week 4 11 Jan. (DM) Lecture...

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