**Lesson Plan: Purchase of Business Account**
**Class Level: Senior Secondary 3**
**Subject: Financial Accounting**
**Duration: 90 minutes**
**Topic: Purchase of Business Account**
**Objectives:**
1. Understand the concept of the purchase of a business.
2. Identify and record the necessary journal entries for the purchase of a business.
3. Analyze the impact on financial statements.
4. Calculate and record goodwill or capital reserve.
**Materials Needed:**
- Whiteboard and markers
- Projector and laptop
- Handouts with sample balance sheets and journal entry templates
- Calculators
- Notebooks and pens
**Lesson Outline:**
**1. Introduction (10 minutes)**
- Briefly discuss the significance of business acquisitions in the commercial world.
- Explain what a purchase of a business account involves.
- State learning objectives for the lesson.
**2. Lecture and Explanation (20 minutes)**
- Define the key terms: purchaser, vendor, purchase consideration, and goodwill.
- Explain the steps involved in purchasing a business:
- Valuation of assets and liabilities
- Calculation of purchase consideration
- Recording in the books of accounts
- Discuss the format of the purchase account.
**3. Detailed Examples (30 minutes)**
- Provide an example of a business acquisition, using sample numbers for assets, liabilities, and purchase consideration.
- Demonstrate on the whiteboard how to:
- Record the purchase consideration
- Handle the assets and liabilities transferred
- Calculate goodwill or capital reserve based on the difference between the purchase consideration and the net assets.
- Show journal entries needed for recording these transactions:
- Debit assets
- Credit liabilities
- Debit/credit the purchase consideration as needed to balance the accounting equation
- Discuss the impact of these transactions on the financial statements.
**4. Guided Practice (15 minutes)**
- Distribute handouts with a different example scenario (based on created balance sheets and purchase consideration).
- Instruct students to work through the necessary journal entries and calculations in pairs.
- Walk around and provide assistance, ensuring students understand the process.
**5. Group Discussion (10 minutes)**
- Bring the class back together and discuss the example used in guided practice.
- Ask volunteers to explain the steps and their results.
- Correct any misunderstandings and clarify doubts.
**6. Independent Practice/Homework (5 minutes)**
- Assign a worksheet with multiple scenarios for the purchase of businesses.
- Instruct students to complete the journal entries and calculate goodwill as homework.
**7. Summary and Conclusion (5 minutes)**
- Recap the main points of the lesson: the purchase of business concepts, steps to be followed, journal entries, and their impacts.
- Highlight the importance of accurate financial recording in the purchase of a business.
- Open the floor for any last questions or clarifications.
**Assessment:**
- Observe student participation during the guided and group discussion.
- Evaluate the homework assignment for understanding and accuracy.
- Include questions on the topic in future quizzes/tests to assess long-term retention and understanding.
**Reflection:**
- After the class, reflect on the effectiveness of the lesson plan.
- Note areas where students seemed confused or had questions for future improvement.
- Consider additional resources or examples that could enhance understanding.