A Company purchases the net assets of B Company which consists of land $2,100,000 and a liability of $100,000,paying by issuing 2,000,000 x $1 which is the fair value of the shares in A Company.A Company will record the acquisition as follows:
A) DR Investment in B $2,000,000 CR Share Capital $2,000,000
B) DR Land $2,100,000 CR Liability $100,000
CR Cash $2,000,000
C) DR Land $2,100,000 CR Liability $100,000
CR Share Capital $2,000.000
D) none of the above

Question

Quizplus · Accepted Answer

The acquisition involves recording the land at its value, removing the liability, and issuing shares to cover the net asset value.

A Company Purchases the Net Assets of B Company Which