Answer to Question #136449 in Finance for El

Question #136449
Grant Limited recognised the following assets and liabilities in its financial statements at 30 June 2019:
Carrying amount Fair value
Property, plant and equipment
Long term loan
Accounts payable 8 500 000
4 200 000
(3 500 000)
(1 650 000) 12 000 000
4 400 000
(3 500 000)
(1 650 000)
R7 550 000 R11 250 000

The current market interest rate for similar transactions is 8,5% per annum.
Scenario 1
Phakama Limited resolved to acquire all the assets and liabilities of Grant Limited on 1 July 2019, and agreed to pay R12 800 000 in cash on 1 July 2020 in full settlement of the acquisition.


Prepare the journal entries required in the records of Phakama Limited, relating to this transaction and the subsequent payment of the purchase consideration.
Expert's answer
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