ABC Ltd acquired all the share capital of McPhill Ltd on 1 Jan 20X8. At that time, the fair values of McPhill Ltds net assets were as follows: Land $ 90 000 Plant and equipment $ 80 000 Accounts receivable $ 25 000 Accounts payable $ 45 000

The share capital of McPhill Ltd consisted of 100,000 ordinary shares issued for $1 and fully paid. The cost of acquisition under the takeover scheme consisted of 80c cash plus one share in ABC for every one share in McPhill. On 1 January 20X8 ABC shares were trading at $1.30 on the ASX. McPhill shares had been trading at $1.40.

REQUIRED: a. Calculate amount of goodwill/bargain (if any) for the acquisition b. Prepare journal entries for the acquisition of the shares in the books of ABC Ltd