Neil Limited sold a business to Howell Limited for $60 000. All assets were recorded by the acquiree at their fair values as follows:
• Land $30 000
• Inventory $20 000
• Trade receivables $4000.

When recording the sale, the acquiree recognises:

Question

Neil Limited sold a business to Howell Limited for $60 000. All assets were recorded by the acquiree at their fair values as follows: 
•	Land $30 000
•	Inventory $20 000
•	Trade receivables $4000.

When recording the sale, the acquiree recognises:

Quizplus · Accepted Answer

The total fair value of the assets is $54,000 ($30,000 + $20,000 + $4,000). Since the business was sold for $60,000, the acquiree recognizes a gain on sale of $6,000 ($60,000 - $54,000).

Neil Limited Sold a Business to Howell Limited for $60