Accounting by the acquirer, liquidation of the acquiree    LO6, 7 Edward Ltd is a manufacturer of frozen foods in Geelong. The company’s products include many forms of vegetables and meats but one item lacking in its product range is frozen fish. The board of Edward Ltd decided to investigate a takeover of a Tasmanian company, Norton Ltd, whose prime product was the packaging of frozen Huon salmon. The reason this company was of particular interest was that Edward Ltd already owned a number of factories in Hobart some of which were underutilised. If Norton were acquired, then Edward Ltd would liquidate the company and transfer all the processing work to its other Hobart factories. The financial statements of Norton Ltd at 1 December 2019 showed the following information. Plant $133 600 Accumulated depreciation — plant (32 000) Land 20 800 Cash 16 000 Accounts receivable 44 800 Inventories 23 200 Total assets 206 400 Accounts payable 24 800 Provisions 24 000 Loans 17 200 Total liabilities 66 000 Share capital — 60 000 A ordinary shares 48 000 — 40 000 B ordinary shares 32 000 Retained earnings 60 400 Total equity $140 400 All the assets and liabilities of Norton Ltd were recorded at amounts equal to fair value except as follows. Fair value Plant $112 000 Land 35 800 Inventories 28 000 Norton Ltd also had a brand ‘Jan West’ that was not recorded by the company because it had been internally generated. It was valued at $10 000. Norton Ltd had not recorded the interest accrued on the loans amounting to $22 800 or annual leave entitlements of $13 000. Edward Ltd decided to acquire all the assets of Norton Ltd except for the cash. In exchange for these assets, Edward Ltd agreed to provide: • two shares in Edward Ltd for every three A ordinary shares held in Norton Ltd. The fair value of each Edward Ltd share was agreed to be $2.16. • artworks to the owners of the B ordinary shares held in Norton Ltd. (These artworks were held in the records of Edward Ltd at $40 000 and valued at $58 000.) • sufficient additional cash to enable Norton Ltd to pay off its liabilities including the expected liquidation costs of $4000. The business combination occurred on 1 December 2019. Legal and accounting costs incurred by Edward Ltd in undertaking this business combination amounted to $1300. Costs to issue the shares to the A ordinary shareholders of Norton Ltd were $700. Required 1. Prepare the journal entries in the records of Edward Ltd at 1 December 2019 to record the business combination.