On 1st January 2020, Courts Ltd acquired all the assets and liabilities of Burns Philip Homecenters. Details of Burns Philip Homecenters' assets and liabilities acquired by Courts Ltd are as follows:

Plant & equipment 240,000

Land 100,000

Motor vehicles 80,000

Inventory 200,000

Accounts receivable 80,000

Accounts payable 50,000

Bank overdraft 100,000

Net assets 550,000

*Above amounts are at fair value*

Details of the consideration transferred are as follows:

Cash of $1,000,000, with to be paid on 1 January 2022. The incremental borrowing rate for Courts Ltd is 20%

500,000 shares in Courts Limited were issued. The share price on 1 January 2020 was $0.75 per share. This price represented a seven-month high price. Costs of issuing the shares was $2,000.

Due to doubts as to whether the share price would remain at or above the $0.75 level, Courts Limited agreed to supply cash to the value of any decrease in the share price below $0.75. This guarantee was valid for a period of 1 month (to 29th February 2020). Courts Limited believed that there was a 5% chance that the share price would remain at or above $0.75 until 29th February 2020 (and a 10% chance that it would fall to $0.65).

Legal fees associated with the acquisition totaled $5,000. Additional Information Burns Philip Homecenters' is currently suing a previous customer. The expected damages is $50,000. Lawyers estimate that there is a 100% chance of winning the case.

Required:

1. Calculate the consideration transferred

2. Calculate the FVINA (fair value of net assets) acquired and determine the amount of goodwill on acquisition.

3. Prepare the journal entry in the books of Courts Limited to account for the acquisition?