Patrons Ltd operates a car manufacturing plant. It has decided to…
QuestionPatrons Ltd operates a car manufacturing plant. It has decided to…Patrons Ltd operates a car manufacturing plant. It has decided to purchase a 100 per cent interest in Sole Ltd, a manufacturing company. The cost of the acquisition is $7,000,000 plus associated legal costs of $10,000.As at the date of acquisition, the statement of financial position of Sole Ltd shows: $ $ $Assets Current assets Cash 110,000 Accounts receivable 60,000 Provision for doubtful debts (10,000) 50,000 Inventory 140,000 Total current assets 300,000 Non-current assets Buildings, at cost 700,000 Accumulated depreciationbuildings (150,000) 550,000 Plant and equipment 400,000 Acc. depreciationplant and equipment (100.000) 300,000 Total non-current assets 850,000 Total assets 1,150,000Liabilities Current liabilities Accounts payable 70,000 Bank overdraft 30,000 Total current liabilities 100,000 Non-current liabilities Bank loan 250,000 Total liabilities 350,000Net assets 800,000Additional informationThe assets and liabilities of Sole Ltd are fairly stated, except for the following: Buildings have a fair value of $600,000. The total inventory has a fair value of $250,000. Sole Ltd has a Trademark. The trademark was not recorded in the statement of financial position. It has a fair value of $700,000.AccountingBusinessFinancial AccountingACCOUNTING BAO2202Share Question
