On July 1, 2013, two companies, Newstar Inc. and PLX Ltd., sign an agreement whereby the operations of

PLX are to be taken over by Newstar. PLX is to liquidate after the transfer is complete. The statements of financial position of the two companies on that day were as follows:

Newstar is to acquire all of the assets of PLX (except for cash). The assets of PLX are recorded at their fair values except for the following:

In exchange, the A class shareholders of PLX are to receive one 7% debenture in Newstar, redeemable on July 1, 2015, for every share held in PLX. The fair value of each debenture is $3.50. The B class shareholders of PLX are toreceive two shares in Newstar for every three shares held in PLX. The fair value of each Newstar share is $2.70. Costs to issue these shares will amount to $900.
Additionally, Newstar is to provide PLX with sufficient cash, additional to that already held, to enable PLX to pay its liabilities. The outstanding bonds are to be redeemed at a 10% premium. Annual leave entitlements of $16,200 out-standing at July 1, 2013, and expected liquidation costs of $5,000 have not been recognized by PLX. Costs to transport and install PLX€™s assets at Newstar€™s premises will be $1,600.
Required
(a) Prepare the acquisition analysis and journal entries in the books of Newstar to record the acquisition of PLX.
(b) Prepare the statement of financial position of Newstar immediately after the acquisition.

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Newstar 50,000 75,000 56,000 65,000 180,000 (60,000) PLX $20,000 Cash Accounts receivable Inventory Land Property, plant, and equipment Accumulated depreciation-property plant, and equipment Investment in Sefton Ltd Bonds in Akaroa Ltd. (face value) 56,000 29,000 167,000 (40,000) 26,000 Accounts payable Mortgage loan 10% bonds(face value) Share capital 10,000 376.000 $62,000 75,000 100,000 258,000 31,000 21,500 30,000 Common shares of $1 A class shares of $2 B class shares of $1 100,000 40,000 60,000 75.500 $258,000 Retained earnings 39.000 $376,000 Fair value $39,200 140,000 22,500 Carrying amount Inventory Property, plant, and equipment Investment in Sefton Ltd $29,000 127,000 26,000