HA3011 Advanced Financial Accounting - Tutorial Questions Assignment 1

Week 4 Question (10 marks)

TXA Ltd acquired a machine from Blue Ltd for the following consideration:

• Cash $70, 000
• Land in the books of TXA Ltd the land is recorded at its cost of $650,000. It has a fair value of $450,000.

TXA Ltd also agrees to assume the liability of the Blue Ltd bank loan of $89,000 as part of the machine acquisition.

Required:

1. Calculate the acquisition cost of the machine. (2 marks)
2. Provide the journal entries that would appear in TXA Ltd.’s books to account for the acquisition of the Machine. (8 marks)