On 1 July 2009, Bugis Ltd entered into an agreement to take over the business of Junction Ltd. On this date the business combination took place with Junction Ltd's Balance Sheet as follows:

Carrying Amount($) Fair Value($)

Cash 50,000

Accounts Receivable 125,000

Inventory 85,000 60,000

Plant & Equipment (net) 760,000 850,000

1,020, 000

Accounts Payable 92,000

Mortgage loan 500,000

Share capital 553,000

Retained earnings (125,000)

1,020,000

Additional information:

1. Bugis Ltd is to acquire all the assets and liabilities of Junction Ltd except for cash and accounts payable.

2. In exchange for the acquired business, Bugis Ltd will give the seller 100,000 Bugis Ltd shares. The fair value of each Bugis Ltd share is $4. Costs to issue these shares will amount to $10,000.

3. Bugis Ltd will also provide enough cash for Junction Ltd to pay off its accounts payable and liquidation charges of $12,000.

4. In addition, Bugis Ltd will offer the seller a piece of land with a fair value of $200,000. The carrying cost of the land was $120,000.

Required:

a) Prepare acquisition analysis in relation to this acquisition. (5 marks)

b) Prepare the journal entries in the books of Bugis Ltd to record the acquisition of Junction Ltd on 1 July 2009. (5 marks)