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Week 5 Question (10 marks)
Swan River Ltd purchased a parcel of assets and liabilities comprising a business directly from Lyneham Pty Ltd. The parcel, measured at net fair values, consisted of:
Balance of Accounts:
| Plant | 50,000 |
| Land | 80,000 |
| Vehicles | 40,000 |
| Accounts receivable | 10,000 |
| Accounts payable | (16,000) |
| Total | 164,000 |
Required:
Prepare journal entries to record the acquisition by Swan River Ltd, assuming that:
- The cost of acquisition was $200,000 cash. (4 marks)
- The cost of acquisition was $144,000 cash. (6 marks)
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