Accounting for business combination by acquirer   LO6 Police Ltd and Box Ltd are small family‐owned companies engaged in vegetable growing and distribution. The Noble family owns the shares in Box Ltd and the Tyler family owns the shares in Police Ltd. The head of the Noble family wishes to retire but his two sons are not interested in carrying on the family business. Accordingly, on 1 July 2021, Police Ltd is to take over the operations of Box Ltd, which will then liquidate. Police Ltd is asset‐rich but has limited overdraft facilities so the following arrangement has been made. Police Ltd is to acquire all of the assets, except cash, delivery trucks and motor vehicles, of Box Ltd and will assume all of the liabilities except accounts payable. In return, Police Ltd is to give the shareholders of Box Ltd a block of vacant land, two delivery vehicles and sufficient additional cash to enable the company to pay off the accounts payable and the liquidation costs of $1500. On the liquidation of Box Ltd, Mr Noble is to receive the land and the motor vehicles and his two sons are to receive the delivery trucks. The land and vehicles had the following market values at 30 June 2021. Carrying amount Fair value Freehold land $50 000 $120 000 Delivery trucks 30 000 28 000 The statements of financial position of the two companies as at 30 June 2018 were as follows. Police Ltd Box Ltd Cash $ 3 500 $ 2 000 Accounts receivable 25 000 15 000 Freehold land 250 000 100 000 Buildings (net) 25 000 30 000 Cultivation equipment (net) 65 000 46 000 Irrigation equipment 16 000 22 000 Delivery trucks 45 000 36 000 Motor vehicles 25 000 32 000 $454 500 $283 000 Accounts payable $ 26 000 $ 23 500 Loan — Bank of Gallifrey 150 000 80 000 Loan — Williams Bros 35 000 35 000 Loan — Smith Corp. 70 000 52 500 Share capital — 100 000 shares 100 000 0 — 60 000 shares 0 60 000 Reserves 28 500 0 Retained earnings 45 000 32 000 $454 500 $283 000 All the assets of Box Ltd are recorded at fair value, with the exception of: Fair value Freehold land $120 000 Buildings 40 000 Cultivation equipment 40 000 Motor vehicle 34 000 Required 1. Prepare the acquisition analysis and the journal entries to record the acquisition of Box Ltd’s operations in the records of Police Ltd. 2. Prepare the statement of financial position of Police Ltd after the business combination.