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Question 4 Business Combination calculations and analytical Accounting by acquirer On 1 July 2021, Mel Ltd took control of the assets and liabilities of Syd Ltd. At this date the statement of financial position of Syd Ltd was as follows: Required Prepare the journal entries in the records of Mel Ltd at 1 July 2021 in each of the following situations, assuming the costs of issuing the shares by Mel Ltd cost $1600. (a) Mel Ltd issued 80 000 shares having a fair value of $2.40 per share in exchange for the net assets of Syd Ltd (b) Mel Ltd issued 80 000 shares having a fair value of $2.00 per share in exchange for the net assets of Syd Ltd. (c) Mel Ltd acquired the shares of Syd Ltd. The agreement was that Mel Ltd would pay the shareholders of Syd Ltd one share in Mel Ltd for every two shares held in Syd Ltd plus $1 in cash for each share held in Syd Ltd. Shares in Mel Ltd have a fair value of $1.80 per share. a) Acquisition of net assets of Syd Ltd: FV of a Mel Ltd shares is $2.00: i) Acquisition analysis: Net FVINAL= $ Net FVINAL: Consideration Transferred: ii) Journal entries: Date Description Dr $ Cr $ c. Acquisition of shares in Syd Ltd: Consideration transferred: Shares: $ Cash: $ Journal entries in Mel Ltd: Shares in Syd Ltd Dr xxx Share capital Cr xxx Cash Cr xxx (Acquisition of shares in Syd Ltd) Share capital Dr xxx Cash Cr xxx (Share issue costs)

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