11 a acquisitionanalysismoretonltdpalmltd 640000

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Unformatted text preview: se Cr Exercise 12.11 A. Acquisition Analysis – Moreton Ltd – Palm Ltd $640 000 $600 000 $40 000 350 000 290 000 85 000 15 000 Net fair value of identifiable assets and liabilities acquired Accounts receivable Inventory Plant and equipment Shares in Shaw Ltd Consideration transferred Debentures ‘A’ shares of Palm Ltd 20 000 Debentures in Moreton (1/1) 20 000 x $3.50 Shares B shares of Palm Ltd 60 000 Shares in Moreton Ltd (2/3) 40 000 x $2.70 Cash Debentures issued 30 000 Plus premium (10%) 3 000 33 000 Accounts payable 31 000 Mortgage loan 21 500 Liquidation costs 5 000 Annual leave 16 200 Total cash required 106 700 Less cash already held (20 000) Goodwill [$264 700 – $257 700] 20 000 80 000 600 000 40 000 $56 000 39 200 140 000 22 500 $257 700 $70 000 108 000 86 700 $264 700 $7 000 2 Exercise 12.11 (Cont’d) General Journal Accounts receivable Inventory Plant and equipment Shares in Shaw Ltd Goodwill Cash Share capital 7% Debentures (Acquisition of Palm Ltd) Dr Dr Dr Dr Dr Cr Cr Cr 56 000 39 200 140 000 22 500 7 000 86 700 108 000 70 000 Acquisition‐related expenses Cash (Payment of acquisition‐related costs) Dr Cr 1 600 1 600 Dr Cr 900 900 Sh...
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