On 1 July 2017 Changi Ltd acquired 100% of the share capital (ex div.) of Herman Ltd for $689 000. At that date, the relevant balances in the records of Herman Ltd were:

	$
Share capital	416,000
General reserve	26,000
Retained earnings	104,000
Dividend payable	13,000

At the date of acquisition all assets and liabilities of Herman Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets:

	Carrying amount	Fair value
	$	$
Machinery	61,100	80,600
Inventory	13,000	18,200

The cost of the Machinery was $97,500 and had a further five (5) year life as at the date of acquisition. All inventory on hand at the acquisition date was sold in March 2018. Herman Ltd disclosed a contingent liability at the date of acquisition in relation to claims for damaged goods. Changi Ltd estimated a fair value of $20,800 on the claim. This claim was settled in November 2020 for $11,700.

Additional information:

1. During the 2019-20 financial year, Changi Ltd purchased inventory from Herman Ltd for $23,400. The cost of inventory to Herman Ltd was $16,900. Half of this inventory was sold by Changi Ltd to external parties by 30 June 2020. The balance was sold to external parties in December 2020.
2. During the 2020-21 financial year, Changi Ltd sold inventory to Herman Ltd for $36,400 at a mark-up of 40%. By 30 June 2021, Herman Ltd still held inventory that it had bought from Changi Ltd for $10,920.
3. On 1 January 2019, Herman Ltd sold an item of plant to Changi Ltd for $52,000. The original cost of the plant to Herman Ltd was $67,600 and had a carrying amount at the time of sale of $41,600. The plant is considered to have a further five (5) years of life as of 1 January 2019.
4. On 1 January 2021, Changi Ltd acquired $65,000 of debentures previously issued by Herman Ltd. The debentures were acquired on the open market for $55,900. Interest on debentures is paid half-yearly. Outstanding interest has been paid by Herman Ltd on 30 June 2021.
5. All transfers from retained earnings to the general reserve by Herman Ltd were from post-acquisition earnings.
6. On realisation of the business combination valuation reserve, a transfer is made to retained earnings on consolidation.
7. The tax rate is 30%.

The financial statements of the two companies at 30 June 2021 are as follows:

	Changi $	Herman $
Revenues	1,105,000	715,000
Expenses	(858,000)	(546,000)
Net profit before tax	247,000	169,000
Income tax expense	(84,500)	(62,400)
Net profit after tax	162,500	106,600
Retained earnings 1 July 2020	208,000	156,000
	370,500	262,600
Dividend paid	(54,600)	(23,400)
Transfer to general reserve	(20,800)	(15,600)
Retained earnings 30 June 2021	295,100	223,600
Share capital	650,000	416,000
General reserve	106,600	70,200
Accounts payable	58,500	26,000
6% debentures		117,000
Other liabilities	124,800	7,800
TOTAL EQUITY AND LIABILITIES	1,235,000	860,600
Cash	121,000	195,000
Accounts receivable	32,500	84,500
Prepayment	39,000	78,000
Inventory	84,500	117,000
Debentures in Herman Ltd	55,900
Investment in Herman Ltd	689,000
Non-current assets	213,100	386,100
TOTAL ASSETS	1,235,000	860,600

Required:

Prepare the consolidation journal entries for the Changi Ltd group for the year ended 30 June 2021. Round all numbers to the nearest whole dollar. (20 marks)

A) acquisition analysis

B) BCVR journal entries

C) pre-acquisition journal entries

D) Intra group journal entries