please answer this Salad Ltd acquired all the net assets of an existing business, Lettuce Ltd...

please answer this

Salad Ltd acquired all the net assets of an existing business, Lettuce Ltd on 1 July 2020. The statements of financial position of the two companies immediately prior to the acquisition were as follows:

		Salad Ltd	Lettuce Ltd
Cash		$4,200	$2,000
Accounts receivable		30,000	16,500
Freehold land		265,000	100,000
Building (net)		35,000	28,000
Cultivation equipment (net)		69,000	46,000
Irrigation equipment		18,000	21,000
Delivery trucks		46,000	36,000
Motor vehicles		30,000	32,000
		497,200	281,500
Accounts payable		29,000	24,500
Loan - Bank of NSW		155,000	79,000
Loan - Bernard Bros		35,000	34,000
Loan - Golds Corp.		72,000	52,500
Share capital	110,000 shares	110,000	-
	60,000 shares	-	60,000
Reserves		28,500	-
Retained earnings		67,700	31,500
		497,200	281,500

All of the assets of Lettuce Ltd are recorded at fair value, with the exception of:

	Fair value
Freehold land*	120,000
Buildings	40,000
Cultivation equipment	40,000
Motor vehicle	34,000

*Fair value excluding Lettuce’s vacant land.

The terms of the acquisition are as follows:

Salad Ltd is to acquire all of the assets, except cash, delivery trucks and motor vehicles of Lettuce Ltd and will assume all of the liabilities except accounts payable.
Salad Ltd is to give the share-holders of Lettuce Ltd a block of vacant freehold land, two delivery vehicles and sufficient additional cash to enable the company to pay of the accounts payable and then liquidation costs of $1,600.
On the liquidation of Lettuce Ltd, the former directors are to receive the land, motor

vehicles and the delivery trucks. The land and vehicles had the following values at 1 July 2020:

	Carrying amount	Fair Value
Freehold Land	$50,000	$120,000
Delivery Trucks	30,000	27,000

Required:

Prepare the acquisition analysis in relation to the acquisition.
Prepare the journal entries in Salad Ltd to record the business combination.
Prepare the statement of financial position of Salad Ltd immediately subsequent to the acquisition.

Expert Solution

ekkarill92 answered 1 year ago

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