Poppy Ltd acquired all of the share capital of Sarsi Ltd on 1 July 2019. On that date, Sarsi Ltd had issued share capital of $200 000 and retained earnings of $80,000. All of the net assets of Sarsi Ltd are recorded at fair values except for the following:
|
Carrying amount |
Fair value |
|
|
$ |
$ |
|
|
Buildings (cost $120,000) |
100,000 |
180,000 |
|
Machinery (cost $150,000) |
120,000 |
140,000 |
Assuming a tax rate of 30%, the following shows the business combination valuation entries required to record the buildings in the consolidation worksheet, Except For :
Dr. Accumulated Depreciation – Building $20,000
Cr. Building $20,000r
Dr. Building $80,000
Cr. BCVR $80,000
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