### Lesson Plan: Purchase of Business
**Grade Level**: Senior Secondary 3
**Subject**: Financial Accounting
**Topic**: Purchase of Business
**Duration**: 90 minutes
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#### **Objective**
By the end of this lesson, students will be able to:
1. Define the term "purchase of business."
2. Identify the key components involved in the purchase of a business.
3. Understand the accounting treatment for purchasing a business.
4. Record necessary journal entries related to the purchase of a business.
5. Prepare a basic balance sheet post-acquisition.
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#### **Materials**
- Textbook
- Whiteboard and markers
- Projector and computer (for presentation slides)
- Handouts (Case study and exercise)
- Calculators
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#### **Lesson Outline**
**Introduction (10 minutes)**
- Welcome students and take attendance.
- Brief recap of the previous lesson.
- Introduce today's topic: Purchase of Business.
**Lecture and Discussion (30 minutes)**
- **Definition**: Explain what is meant by the "purchase of business."
- Buying another company's assets or shares
- Acquiring control over the other company
- **Key Components**:
- **Assets**: Tangible and intangible
- **Liabilities**: Outstanding debts and obligations
- **Goodwill**: Defined and explained
- **Accounting for Purchase**:
- Types of considerations (cash, shares, other assets)
- Explanation of mergers, acquisitions, and consolidation
**Case Study (15 minutes)**
- Handout a simplified case study of a business acquisition.
- In groups, have students identify the assets, liabilities, and goodwill involved in the purchase.
- Discuss the findings as a class.
**Journal Entries (20 minutes)**
- Demonstrate on the whiteboard how to make journal entries for:
- Purchase of assets
- Assumption of liabilities
- Goodwill calculation and entry
- Provide students with common scenarios, and let them practice entries in pairs.
**Balance Sheet Preparation (10 minutes)**
- Show how the acquired assets, liabilities, and goodwill appear on the balance sheet.
- Quick walkthrough on adjusting the pre-existing balance sheet of the buying company to reflect new acquisitions.
**Practice Exercise (10 minutes)**
- Distribute an exercise worksheet with a scenario.
- Have students work individually to create journal entries and a balance sheet.
- Review answers collectively towards the end.
**Q&A and Recap (5 minutes)**
- Answer any remaining questions from students.
- Recap the key points of the lesson.
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#### **Assessment**
- Formative: Participation during discussion, accuracy in practice exercises, involvement in case study.
- Summative: Collect and grade practice exercise worksheet.
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#### **Homework**
- Assign a scenario-based homework where students have to analyze a hypothetical business acquisition, list necessary journal entries, and prepare a post-acquisition balance sheet.
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#### **Extension Activity**
- Look into recent news about company mergers or acquisitions and discuss in the next class to connect theory with real-world applications.
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### **Notes for Next Lesson**
- Review any difficult concepts based on student performance in practice exercises.
- Introduce the next topic in the curriculum, potentially linking it to today's lesson for continuity.
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### **End of Lesson Plan**