A Ltd is seeking to expand its share of the pet care market and has negotiated to acquire the operations of B Ltd and the shares of C Ltd. At 1 July 2010, the trial balances of the three companies were:

A Ltd		B Ltd		C Ltd
Cash	$145,000		$5,200		$84,000
Accounts receivable	34,000		21,300		12,000
Inventory	56,000		30,000		25,400
Shares in listed companies	16,000		22,000		7,000
Land and buildings (net)	70,000		40,000		36,000
Plant and equipment (net)	130,000		105,000		25,000
Goodwill (net)	6,000		5,000		5,600
$457,000		$228,500		$195,000
Accounts payable	65,000		40,000		29,000
Bank overdraft	0		0		1,500
Debentures	50,000		0		100,000
Mortgage loan	100,000		30,000		0
Contributed equity:
Ordinary shares of $1, fully paid	200,000		150,000		60,000
Other reserves	15,000		6,500		2,500
Retained earnings (30/6/10)	27,000		2,000		2,000
$457,000		$228,500		$195,000

B Ltd

A Ltd is to acquire all assets (except cash and shares in listed companies) of B Ltd. Acquisition-related costs are expected to be $7,600. The net assets of B Ltd are recorded at fair value except for the following:

Carrying amount		Fair Value
Inventory	$30,000		$26,000
Land and Buildings	40,000		80,000
Shares in listed companies	22,000		18,000
Accountings payable	(40,000)		(49,100)
Accrued leave	0		(29,700)

In exchange, the shareholders of B Ltd are to receive, for every three B Ltd shares held, one A Ltd share worth $2.50 each. Costs to issue these shares are $950. Additionally, A Ltd will transfer to B Ltd its Shares in Listed Companies asset, which has a fair value of $15,000. These shares, together with those already owned by B Ltd, will be sold and the proceeds distributed to the B Ltd shareholders. Assume that the shares were sold for their fair values.

A Ltd will also give B Ltd sufficient additional cash to enable B Ltd to pay all its creditors. B Ltd will then liquidate. Liquidation costs are estimated to be $8,700.

C Ltd

A Ltd is to acquire all the issued shares of C Ltd. In exchange, the shareholders of C Ltd are to receive one A Ltd share, worth $2.50, and $1.50 cash for every two C Ltd shares held.

Required:

1. Prepare the acquisition analysis.

2. Prepare the journal entries to record the acquisitions in the records of A Ltd.