Background information Palermo Limited (Palermo) is an Australian company. On 1 January 2021 it acquired a 90\% controlling interest in Syracuse SRL (Syracuse), a company based in Italy. The founders of Syracuse retained a 10% interest in the company when Palermo acquired its controlling interest. The purchase consideration for the 90% interest was 6,000,000 in cash and the issue of one share in Palermo for every five shares acquired in Syracuse. Palermo's shares were trading at A\$5.20 per share on the date of acquisition. Syracuse's identifiable assets and liabilities at acquisition date were recorded at fair value, except for an internally generated brand name. The Syracuse brand name was independently determined to have a fair value of 800,000 at acquisition date. The brand name was expected to have a useful life of seven (7) years from the acquisition date. Additional information - The presentation currency of the Palermo consolidated group is Australian dollars. - Palermo uses the partial goodwill method for all business combinations. - Syracuse's functional currency is the euro. - All revenues and expenses are earned and incurred evenly throughout the period, except for a sale of inventory that occurred on 30 September 2023. On this date, Syracuse sold inventory to Palermo for 490,000, which was made on the basis of cost plus 40\%. At 31 December 2023, Palermo still owns this inventory and had paid Syracuse for the purchase. - On 31 December 2023, Syracuse revalued its property to a fair value of 3,200,000. Immediately prior to the revaluation, the property was recognised at a cost of 3,000,000 and accumulated depreciation of 1,600,000. - No dividends have been declared or paid since 1 January 2021. - There have been no impairment write-downs on goodwill in Syracuse to date. - The Italian tax rate is 24%, and the Australian tax rate is 30%. - Syracuse's post-acquisition profits for the first two years since Palermo's acquisition are as follows: On 31 December 2023, Syracuse's trial balance was as follows: \begin{tabular}{|c|c|} \hline & \\ \hline Revenue & 2,600,000 \\ \hline Cost of sales & (980,000) \\ \hline Other expenses including depreciation & (580,000) \\ \hline Employee benefits expense & (410,000) \\ \hline Finance costs & (18,000) \\ \hline Income tax expense & (135,000) \\ \hline Profit for the year & 477,000 \\ \hline \multicolumn{2}{|l|}{ Assets } \\ \hline Cash and cash equivalents & 1,594,000 \\ \hline Trade receivables & 430,000 \\ \hline Inventory & 990,000 \\ \hline Plant and equipment & 9,800,000 \\ \hline \begin{tabular}{l} Plant and equipment - accumulated \\ depreciation \end{tabular} & (1,200,000) \\ \hline Property at revaluation & 3,200,000 \\ \hline Property - accumulated depreciation & 0 \\ \hline Deferred tax asset & 102,000 \\ \hline \multicolumn{2}{|l|}{ Liabilities } \\ \hline Bank overdraft & (410,000) \\ \hline Trade payables & (200,000) \\ \hline Current tax liability & (140,000) \\ \hline Deferred tax liability & (514,000) \\ \hline \multicolumn{2}{|l|}{ Shareholders' equity } \\ \hline Share capital & (9,000,000) \\ \hline \begin{tabular}{l} Opening retained earnings \\ (01.01.2023) \end{tabular} & (2,807,000) \\ \hline Revaluation surplus & (1,368,000) \\ \hline \end{tabular} Exchange rates over the three years since Palermo's acquisition of Syracuse were as follows: Task - Prepare Palermo's general ledger journal entry on 1 January 2021 to recognise its investment in Syracuse