On 1 September 2016, the directors of Face Ltd approached the directors of Bo Ltd with the following proposal for the acquisition of the issued shares of Bo Ltd, conditional on acceptance by 90% of the shareholders of Bo Ltd by 30 November 2016.

Two fully paid ordinary shares in Face Ltd plus $3.10 cash for every preference share in Bo Ltd, payable at acquisition date.

Three fully paid ordinary shares in Face Ltd plus $1.20 cash for every ordinary share in Bo Ltd. Half the cash is payable at acquisition, and the other half in one years time.

By 30 November, 90% of the ordinary shareholders and all of the preference shareholders of Bo Ltd had accepted the offer. The directors of Face Ltd decided not to acquire the remaining ordinary shares. Share transfer forms covering the transfer were dated 30 November 2016, and showed a price per Face Ltd ordinary share of $4.20. Face Ltd.s incremental borrowing rate is 8% p.a.

Face Ltd then appointed a new board of directors of Bo Ltd. This board took office on 1 December 2016 and immediately:

Revalued the asset Shares in Other Companies to its market value (assume no tax effect)

Used the surplus so created to make a bonus issue of $32000 to ordinary shareholders, each shareholder being allocated two ordinary shares for every ten ordinary shares held.

The statement of financial position of Bo Ltd at 30 November 2016 as follows.

Bo Ltd

Statement of financial position

As at 30 November 2016

Current Assets		$120,000
Non-current assets
Land and buildings	203,000
Plant and equipment	168000
Less: Accumulated Depreciation	(45000)
Shares in other companies listed on stock exchange at cost(market 190000)	30000
Government bonds, at cost	50000
Total non-current assets		406000
Total assets		526000
Current liabilities		30000
Net assets		496000
Equity
Share capital
80000 ordinary shares fully paid	160000
50000 6% preference shares fully paid	100000	260000
Retained earnings		236000
Total equity		496000

Required:

Prepare all journal entries (in general form) to record the above transactions in the records of (a) Face Ltd and (b) Bo Ltd.