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 60,0000 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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

60,0000

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.

 

 

 

 

 

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