Descartes Ltd acquired all the assets, except cash, and assumed all the liabilities of Turing Ltd on 1 July 2021. Descartes Ltd agreed to provide the following consideration: (1) Cash payment of $300,000, half of which was paid on the acquisition date, the remaining half was to be paid one year after the acquisition on 1 July 2022. (2) Provide an existing trademark to Turing Ltd. The trademark was not recognised in Descartes Ltd's balance sheet but was estimated to have a fair value of $22,345 on the acquisition date. (3) Issue 50,000 shares in Descartes Ltd to the owners of Turing Ltd. Descartes Ltd's shares were trading at $13.18 per share on 1 July 2021. The cost of the share issue was $13,180. (4) In the event that Descartes Ltd's share price falls below $10.00 per share by 1 July 2022, Descartes Ltd would provide an additional cash payment of $3.18 per share for the 50,000 issued shares on 1 July 2022. There was a 40% chance for the share price of Descartes Ltd to fall below $10.00 by 1 July 2022. Descartes Ltd incurred $65,970 accounting and legal fees in relation to its acquisition of Turing Ltd. Descartes Ltd's marginal cost of capital is 6% per annum. The corporate tax rate is 30%. On 1 July 2021, the financial position of Turing Ltd was as follows: Carrying amount Fair value Assets Cash $30,000 Accounts receivable 390,000 210,000 Land 270,000 420,000 120,000 90,000 270,000 480,000 Equipment (net of depreciation) Buildings (net of depreciation) Vehicles (net of depreciation) Other Investments 240,000 255,000 180,000 120,000 Other Non-Current Assets (net of depreciation) 600.000 540,000 Total assets $2,100,000 750,000 Equity Share capital - 10,000 shares Retained earnings Total equity 360,000 1,110,000 150,000 150,000 120,000 Liabilities Accounts payable Loans Debentures Total liabilities Total equity and liabilities 120,000 720,000 720,000 990,000 $2,100,000 Through the due diligence process, it was discovered that Turing Ltd was being sued by a local community group for damaging the environment. It was estimated that there was a 45% chance that Turing Ltd would lose the lawsuit and be ordered to pay compensation of $90,000. In addition, Turing Ltd had an internally developed patent which is not recorded in its balance sheet but has a fair value of $15,000. Required: Part (A): Complete the acquisition analysis of this business combination and calculate the goodwill or gain on bargain purchase (5 marks). Part (B): Prepare the journal entries in the records of Descartes Ltd in relation to its acquisition of Turing Ltd on 1 July 2021 in accordance with AASB 3 (8 marks). Show all calculations. Formatting requirements: In all journal entries, you must specify whether the entry is a debit or credit entry by including "Dr" or "Cr" before the account name. Credit entries must also be indented. Journal entries which do not follow these requirements will be awarded a mark of zero. Below are examples of correctly formatted journal entries: Dr Cash 1000 Cr Cash 1000 Descartes Ltd acquired all the assets, except cash, and assumed all the liabilities of Turing Ltd on 1 July 2021. Descartes Ltd agreed to provide the following consideration: (1) Cash payment of $300,000, half of which was paid on the acquisition date, the remaining half was to be paid one year after the acquisition on 1 July 2022. (2) Provide an existing trademark to Turing Ltd. The trademark was not recognised in Descartes Ltd's balance sheet but was estimated to have a fair value of $22,345 on the acquisition date. (3) Issue 50,000 shares in Descartes Ltd to the owners of Turing Ltd. Descartes Ltd's shares were trading at $13.18 per share on 1 July 2021. The cost of the share issue was $13,180. (4) In the event that Descartes Ltd's share price falls below $10.00 per share by 1 July 2022, Descartes Ltd would provide an additional cash payment of $3.18 per share for the 50,000 issued shares on 1 July 2022. There was a 40% chance for the share price of Descartes Ltd to fall below $10.00 by 1 July 2022. Descartes Ltd incurred $65,970 accounting and legal fees in relation to its acquisition of Turing Ltd. Descartes Ltd's marginal cost of capital is 6% per annum. The corporate tax rate is 30%. On 1 July 2021, the financial position of Turing Ltd was as follows: Carrying amount Fair value Assets Cash $30,000 Accounts receivable 390,000 210,000 Land 270,000 420,000 120,000 90,000 270,000 480,000 Equipment (net of depreciation) Buildings (net of depreciation) Vehicles (net of depreciation) Other Investments 240,000 255,000 180,000 120,000 Other Non-Current Assets (net of depreciation) 600.000 540,000 Total assets $2,100,000 750,000 Equity Share capital - 10,000 shares Retained earnings Total equity 360,000 1,110,000 150,000 150,000 120,000 Liabilities Accounts payable Loans Debentures Total liabilities Total equity and liabilities 120,000 720,000 720,000 990,000 $2,100,000 Through the due diligence process, it was discovered that Turing Ltd was being sued by a local community group for damaging the environment. It was estimated that there was a 45% chance that Turing Ltd would lose the lawsuit and be ordered to pay compensation of $90,000. In addition, Turing Ltd had an internally developed patent which is not recorded in its balance sheet but has a fair value of $15,000. Required: Part (A): Complete the acquisition analysis of this business combination and calculate the goodwill or gain on bargain purchase (5 marks). Part (B): Prepare the journal entries in the records of Descartes Ltd in relation to its acquisition of Turing Ltd on 1 July 2021 in accordance with AASB 3 (8 marks). Show all calculations. Formatting requirements: In all journal entries, you must specify whether the entry is a debit or credit entry by including "Dr" or "Cr" before the account name. Credit entries must also be indented. Journal entries which do not follow these requirements will be awarded a mark of zero. Below are examples of correctly formatted journal entries: Dr Cash 1000 Cr Cash 1000