Answer to Question #104053 in Accounting for Serisha

Question

Grant Limited recognised the following assets and liabilities in its financial statements at 30 June
2019:
Carrying amount Fair value
Property, plant and equipment
Inventory
Long term loan
Accounts payable
8 500 000
4 200 000
(3 500 000)
(1 650 000)
12 000 000
4 400 000
(3 500 000)
(1 650 000)
R7 550 000 R11 250 000
The current market interest rate for similar transactions is 8,5% per annum.
Scenario 1
Phakama Limited resolved to acquire all the assets and liabilities of Grant Limited on 1 July 2019, and
agreed to pay R12 800 000 in cash on 1 July 2020 in full settlement of the acquisition.
Required:
1. Calculate the purchase consideration.
2. Determine the acquisition date
3. Calculate the amount of goodwill, if any, acquired.
4. Prepare the journal entries required in the records of Phakama Limited, relating to this transaction
and the subsequent payment of the purchase consideration.

Answer 1

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