Damon Limited Acquired the Net Assets of Gina Limited

question 17

Multiple Choice

Damon Limited acquired the net assets of Gina Limited.Damon Limited provided an item of equipment as part of the consideration.The fair value of the equipment was $13 000.It cost $20 000 and had a carrying amount of $12 000.Which of the following entries appropriately reflects the gain or loss on the equipment?

• A)DR Loss on sale $1 000
• B)CR Loss on sale $1 000
• C)CR Gain on sale $1 000
• D)Dr Gain on sale $1 000.

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Definitions:

Synergy

The concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts.

Cost Complementarity

Occurs when the cost of producing one good decreases with the increase in production of another good, showing a synergy between the production processes of two goods.

Diseconomies Of Scope

The phenomenon where the cost of producing two or more products together is higher than producing them separately.

Economies Of Scope

cost advantages that enterprises obtain due to the efficient allocation and utilization of resources across multiple products or services.