On 1 January 2019, Company P purchased 80% of the equity of Company S. The following transactions arose at the acquisition date.

Issue of P's shares: 1,200,000 shares [Note b]

Immediate cash payment; $400,000

Deferred cash payment; $1,000,000 payable 2 years later

Due diligence fees paid to lawyers ; $20,000

Equipment transferred ; $40,000 (fair value=book value)

Note:

1. P's effectiveinterest rate was 5% per annum.
2. P's share price is $1.25
3. The fair value of non-controlling interests at acquisition date was $640,000.
4. Share capital and Retained earnings of S were $1,000,000 and $900,000
5. respectively on 1 January 2019. On the same day, there was an intangible asset carried in S at $500,000 but the fair value of it was $700,000.

Required:

a. Determine the fair value of the consideration transferred on 1 January 2019 in accordance with IFRS 3 Business Combinations. Round to the nearest integer.

1. Prepare the journal entries in P's books on 1 January 2019.
2. Calculate the goodwill on 1 January 2019.

d. Discuss the three qualitative factors set out in IFRS 10 Consolidated Financial Statements to determine theexistence of "Control".