Journal Entries for Business Purchase and Aerodrone Limited

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
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1FINANCIAL ACCOUNTING
Table of Contents
1. Introduction:................................................................................................................................2
2. Journal entries for business purchase with reference to specific paragraphs in Australian
accounting standards:.......................................................................................................................2
3. Journal entries for Aerodrone Limited with reference to specific paragraphs in Australian
standards for depreciation, amortisation, impairment and inventory:.............................................3
4. Recommendation regarding the selection of the measurement basis:.........................................5
5. Conclusion:..................................................................................................................................5
References:......................................................................................................................................6

2FINANCIAL ACCOUNTING
1. Introduction:
The current paper would focus on evaluating the accounting transactions in the context of
Aerodrone Limited, which is buying a drone manufacturing business on 1st July 2019. For buying
the same, the organisation has purchased different classes of assets, which include patent,
inventory and factory plant and equipment. Based on such purchase and acquisition, the journal
entries are made with reference to specific paragraphs mentioned in Australian accounting
standards. Finally, the paper would shed light on providing recommendation to the organisation
regarding the selection of the measurement base.
2. Journal entries for business purchase with reference to specific paragraphs in Australian
accounting standards:
Workings:
In this case, the accounting standard that would be applicable is “AASB 3 Business
Combinations”. In accordance with “Paragraph 10 of AASB 3”, it is necessary for the acquiring
organisation to recognise goodwill separately from the identifiable net assets acquired, non-