Scenario A

A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date, 1 July 20x3.

Required:
Prepare the journal entries that A Co would record to reflect the above transactions on 1 July 20x3. Unamortized discount or premium, where applicable, should be shown separately.

Scenario B
A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date, 1 July 20x3.

Required:
Prepare the journal entries to record the above transactions on 1 July 20x3 in the books of A Co. Unamortized discount or premium, where applicable, should be shown separately.

Transcribed Image Text:

1. Cash payment to owners of B Co.. 2. Loan payable to banks to finance the acquisition of B Co.. 3. Fair value of shares issued to owners of B Co.. 4. Book value of shares issued to owners of B Co. 5. Cost of issuing equity.. 6. Deferred consideration, payable at the end of 5 years.. 7. Present value of deferred consideration at an interest rate of 5% p.a.. $4,000,000 $3,200,000 $5,000,000 $4,000,000 $40,000 $8,000,000 $6,268,209