On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200. The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying Amount ($) Fair Value ($) Assets Cash 2,000 2,000 Accounts receivable 10,000 10,000 Inventory 64,000 68,000 Equipment 320,000 232,000 Accumulated depn - Equipment (96,000) - Patents 280,000 280,000 Liabilities Accounts payable (16,000) (16,000) Debentures (64,000) (64,000) Required: a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd. b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.

On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200. The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows: Carrying Amount ($) Fair Value ($) Assets Cash 2,000 2,000 Accounts receivable 10,000 10,000 Inventory 64,000 68,000 Equipment 320,000 232,000 Accumulated depn - Equipment (96,000) - Patents 280,000 280,000 Liabilities Accounts payable (16,000) (16,000) Debentures (64,000) (64,000) Required: a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd. b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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