A Co acquires a controlling interest in B Co. The following information relates to transactions occurring on or before the acquisition date, 1 July 20x0:

The financial year end falls on 31 December.

Required
1. Show the journal entries to record the above transactions in A Co’s books as at 1 July 20x0.
2. Prepare the amortization table on the deferred consideration for the period from 1 July 20x0 to 30 June 20x5.
3. Show the journal entry to record the interest on the deferred consideration for the year ended 31 December 20x1.
4. Show the journal entry to record the terminal entry for the contingent consideration as at 31 December 20x1.

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Cash payment to owners of B Co.. Loan payable to banks to finance the acquisition of B Co.. Fair value of shares issued to owners of B Co.. Book value of shares issued to owners of B Co. Cost of issuing equity..... Deferred consideration, payable at the end of 5 years. Present value of deferred consideration ... Additional payment made by A Co if contingent event occurs. Contingent event: Profit of B Co for year ending 31 Dec 20x1 Period for profit target...... Date of payment of contingent payment.. Probability of profit of B Co> $5 million in 20x1. Probability of profit of B Co < $5 million in 20x1. Cost of capital of A Co...... Cost of capital of former owners. Actual profit for B Co for year ended 31 Dec 20x1. Fair value of buildings transferred to owners of B Co. Book value of buildings transferred to owners of B Co.. Valuation and due diligence fees.. $4,000,000 5,000,000 6,400,000 3,600,000 90,000 8,000,000 6,268,209 1,000,000 > $5 million Year ending 31 Dec 20x1 31 Dec 20x1 0.6 0.4 5% p.a. 7% p.a. $4 million $6,000,000 $5,500,000 $130,000