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A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date 1 July 20x3 Cash payment to owners
A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date 1 July 20x3
Cash payment to owners of B Co | $4,000,000 |
Loan payable to banks to finance the acquisition | $3,200,000 |
Fair value of shares issued to owners of B Co | $5,000,000 |
Book value of shares issued to owners of B Co | $4,000,000 |
Cost of Issuing equity | $40,000 |
Deferred consideration, payable at the end of 5 years | $8,000,000 |
Present value of deferred consideration at an interest of 5%pa | $6,268,209 |
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.
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