On 1 January 2018, A Ltd bought all of the assets and liabilities of B Ltd for a price of £500,000. B Ltd then went into liquidation. The statements of financial position of the two companies just before this purchase were as follows:
The fair values of the assets and liabilities of B Ltd as at 1 January 2018 were agreed to be as follows:
£000
Property, plant and equipment …………………………………………….390
Inventories………………………………………………………………………..160
Trade receivables………………………………………………………………. 80
Current liabilities………………………………………………………………..180
Required:
(a) Calculate the amount paid by A Ltd for the of B Ltd.
(b) Prepare a statement of financial position for A Ltd as it would be immediately after the purchase of the net assets of B Ltd, assuming that A Ltd paid for this purchase out of its bank account.
