Lai Hing Ltd. acquired all the assets and liabilities of Sound Ltd. on January 1, 2013. At this date, the assets and liabilities of Sound consisted of:

In exchange for these net assets, Lai Hing agreed to the following:
€¢ Issue 10 Lai Hing shares for every Sound share. Lai Hing shares were considered to have a fair value of $10 per share; costs of share issue were $500.
€¢ Transfer a patent to the former shareholders of Sound. The patent was carried in the records of Lai Hing at $350,000 but was considered to have a fair value of $1 million.
€¢ Pay $5.20 per share in cash to each of the former shareholders of Sound. Lai Hing incurred $10,000 in costs associated with the acquisition of these net assets.
Required
(a) Prepare an acquisition analysis in relation to this acquisition.
(b) Prepare the journal entries in Lai Hing to record the acquisition.

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Carrying amount $1,000,000 4,000,000 5,000,000 500,000 Fair value Current assets Non-current assets $980,000 4,220,000 5,200,000 500,000 4,700,000 Liabilities $4.500,000$4.700,000 Share capital -100,000 shares Reserves $3,000,000 1,500,000 $4,500,000