HI5020 Corporate Accounting - Tutorial Questions Assessment

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Question 2

On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.

At this date the statement of financial position of Eldorado Ltd was as follows:

	Carrying amount	Fair value
Machinery	$40,000	$67,000
Fixtures & fittings	60,000	68,000
Vehicles	35,000	35,000
Current assets	10,000	12,000
Current liabilities	(16,000)	(18,000)
Total net assets	$129,000
Share capital (80,000 shares at $1.00 per share)	$80,000
General reserve	20,000
Retained earnings	29,000
Total equity	$129,000

Required:
Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition. (10 marks)

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