Case 1: Accounting by the acquirer The trial balance of Jackman Ltd at 1 January 2019 was as follows: Debit Credit Share capital Preference - 15 000 fully paid shares Ordinary - 70 000 fully paid shares Retained earnings Equipment 34000 Accumulated depreciation equipment 20000 Inventories 36000 Accounts receivable 33000 Investments 12000 Patents 7000 Debentures 8000 Accounts payable 172000 172000 16000 At this date, all the assets and liabilities of Jackman Ltd are sold to Hugh Ltd, with Jackman Ltd going Into voluntary liquidation. The terms of acquisition are: (a) Hugh Ltd is to take over all the assets of Jackman Ltd, as well as the accounts payable of Jackman Lid. (b) Costs of liquidation of $700 are to be paid by Jackman Ltd with funds supplied by Hugh Ltd. c) Preference shares in Jackman Ltd are to receive two fully paid shares in Hugh Ltd for every three shares held, or alternatively, $0.80 per share in cash payable at the acquisition date. d) Ordinary shareholders of Jackman Ltd are to receive two fully paid ordinary shares in Hugh Ltd for every share held or, alternatively, $2.50 in cash payable half at the acquisition date and half in one year's time. (e) Debenture holders of Jackman Ltd are to be paid in cash out of funds provided by Hugh Ltd. The debentures have a fair value of $102 per $100 debenture. All shares issued by Hugh Ltd have a fair value of 51 20 per share 5) Costs of issuing and registering the shares issued by Hugh Ltd amount to $80 for the preference shares and $200 for the ordinary shares. In Legal and accounting costs associated with the acquisition of lackman Ltd amount to $2000 The two parties agree on the terms of the arrangement, and holders of 6000 preference shares and 10 000 ordinary shares elect to receive cash Hugh Ltd assesses the fair values of the identifiable assets and liabilities of lackman Ltd to be as follows: Equipment 72000 Accounts receivable 29000 Investments Accounts payable 12000 16000l Hugh Ltd has an incremental borrowing rate of 10%. Required (a) Prepare the acquisition analysis in relation to the above acquisition by Hugh Ltd. b) Prepare the journal entries in the records of Hugh Ltd at the date of acquisition c) Prepare the journal entry for the payment of the deferred consideration in one year's time