Asked by grace kelly on Jul 07, 2024
Verified
Gemma Limited acquired a number of assets for $400 000 cash. The fair values of the assets on date of acquisition were: building $320 000, furniture and fittings $80 000. The correct journal entry to record this acquisition is:
a.b. DR Property, plant and equipment $440,000 CR Cash $440,000\begin{array}{lr}\text { DR Property, plant and equipment }&\$440,000\\\text { CR Cash }&&\$440,000\\\end{array} DR Property, plant and equipment CR Cash $440,000$440,000
b. DR Property, plant and equipment $440,000 CR Cash $440,000\begin{array}{lr}\text { DR Property, plant and equipment }&\$440,000\\\text { CR Cash }&&\$440,000\\\end{array} DR Property, plant and equipment CR Cash $440,000$440,000
c. DR Building $320,000 DR Furniture and fittings $80,000 CR Cash $400,000\begin{array}{lr}\text { DR Building } & \$ 320,000 \\\text { DR Furniture and fittings }\quad\quad\quad\quad & \$ 80,000\\\text { CR Cash }&&\$400,000\end{array} DR Building DR Furniture and fittings CR Cash $320,000$80,000$400,000
d. DR Building $352,000 DR Furniture $88,000 CR Cash $440,000\begin{array}{lr}\text { DR Building }\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad & \$ 352,000 \\\text { DR Furniture } & \$ 88,000\\\text { CR Cash }&&\$440,000\end{array} DR Building DR Furniture CR Cash $352,000$88,000$440,000
Fair Values
An estimation of the market value of an asset or liability, based on current prices in an active market or through model-based techniques when no active market exists.
Journal Entry
A record of a business transaction in an accounting system that includes the accounts and amounts to be debited and credited.
Acquisition
The process of acquiring control of another company or business asset, which can involve a purchase, merger, or take-over.
- Record the acquisition and disposal of property, plant, and equipment, including journal entries.
Verified Answer
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Learning Objectives
- Record the acquisition and disposal of property, plant, and equipment, including journal entries.