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Step 4. Acquirer’s Entries at Date of Acquisition. The basic form of the journal entry is Dr Assets Dr Goodwill Cr Liabilities assumed Cr Payable to Acquiree Cr Other Associated Payables. Recorded at fair value (from Step 1). From Step 3. Purchase Consideration (from Step 2). Step 4.
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Step 4 Acquirer’s Entries at Date of Acquisition The basic form of the journal entry is • Dr Assets • Dr Goodwill • Cr Liabilities assumed • Cr Payable to Acquiree • Cr Other Associated Payables Recorded at fair value (from Step 1) From Step 3 Purchase Consideration (from Step 2)
Step 4 Acquirer’s Entries at Date of Acquisition Dr Inventory 5,000 Dr Equipment 12,500 Dr Furniture 13,000 Dr Vehicle 20,000 Dr Goodwill 25,518 Cr Accounts Payable 4,000 Cr Provision for Compensation 2,500 Cr Payable to Pizza Limited 68,018 Cr Legal Costs Payable 1,500
Step 4 Acquirer’s Entries at Date of Acquisition Burgers Ltd will pass the following journal entry when it transfers the shares to Pizza Ltd Dr Payable to Pizza Ltd 50,000 Cr Share Capital 50,000 Total Purchase Consideration is $68,018. Burgers Ltd has paid $50,000 of this, leaving a balance of $18,018. This balance represents the amount payable in one year.
Step 4 Acquirer’s Entries at Date of Acquisition Burgers Ltd must also pay the Legal fees Dr Legal Costs Payable 1,500 Cr Cash 1,500 End Step 4
