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In the following que I need your help sir?
ABC Ltd acquired a Machine from XYZ Ltd for the following consideration:
o Cash $65 000,
o Land in the books of ABC Ltd the land is recorded at its cost of $750 000.
It has a fair value of $700 000.
ABC Ltd also agrees to assume the liability of the XYZ Ltd bank loan of $95 000 as part of the Machine acquisition.
Required:
Calculate the acquisition cost of the MachineIn the above que how will treat land amount in the cost of machine do we include $750000 or $700000 in the cost of machine ?
In the above que how will treat XYZ ltd bank loan of $95000 in the cost of machine do we include?
From what you have typed it would seem that the cost of the machine is 65,000 + 95,000 = 160,000. The land has nothing to do with it.
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