Accounting by an acquirer   LO6 Howard Ltd is seeking to expand its share of the widgets market and has negotiated to take over the operations of Falcon Ltd on 1 January 2021. The statements of financial position of the two companies as at 31 December 2020 were as follows. Howard Ltd Falcon Ltd Cash $ 23 000 $ 12 000 Accounts receivable 25 000 34 700 Inventories 35 500 27 600 Freehold land 150 000 100 000 Buildings (net) 60 000 30 000 Plant and equipment (net) 65 000 46 000 Goodwill 25 000 2 000 $383 500 $252 300 Accounts payable 56 000 45 100 Mortgage loan 50 000 44 000 Debentures 100 000 52 500 Share capital — 100 000 shares 100 000 — — 60 000 shares — 60 000 Other reserves 28 500 26 800 Retained earnings 49 000 23 900 $383 500 $252 300 Howard Ltd is to acquire all the identifiable assets, except cash, of Falcon Ltd. The assets of Falcon Ltd are all recorded at fair value except the following. Fair value Inventories $ 39 000 Freehold land 130 000 Buildings 40 000 In exchange, Howard Ltd is to provide sufficient extra cash to allow Falcon Ltd to repay all of its outstanding debts and its liquidation costs of $2400, plus two fully paid shares in Howard Ltd for every three shares held in Falcon Ltd. The fair value of a share in Howard Ltd is $3.20. Costs of issuing the shares were $1200. Required Prepare the acquisition analysis and journal entries to record the business combination in the records of Howard Ltd.