On 26 June 2020 after a long negotiation, it was decided upon mutual agreement that Fauci Ltd sold all of its assets (except cash) and liabilities to Anthony Ltd. Fauci Ltd will liquidate immediately after the business combination has been completed. The Statement of Financial Position of Fauci Ltd as at 26 June 2020 was: Carrying amount Fair value Assets Land $ 25 590 $70,000 Vehicles (net) 97 750 97,750 Inventories 48 950 38,000 Plant 58 800 37,800 Accumulated depreciation - plant (21 000) Trademarks 78 000 160,000 Cash 20 575 Accounts receivable 55 750 55,750 Total assets $364 415 459,300 Equity Share capital - Ordinary at $1 each (fully paid) Share capital - Preference at $5 each (fully paid) Retained earnings Total equity 210 000 70 000 (14.050) 265 950 Liabilities Accounts payable Debentures (secured) Total liabilities Total equity and liabilities 25 465 73 000 98 465 $364 415 25,465 61,000 86.465 For this business combination, Anthony Ltd also incurred due diligence fee of $4,800 in undertaking this acquisition. Fauci Ltd also had another trademark that was not recorded because it had been internally generated. The trademark was fair valued at $12,000. In exchange, Anthony Ltd agreed to give Fauci Ltd the following: 1. The shareholders of Fauci Ltd would receive 2 ordinary shares in Anthony Ltd for every 5 ordinary shares held in Fauci Ltd. The fair value of these new ordinary shares was agreed to be $1.75 each. Costs to issue and registering the shares were $2,100. 2. The preference shareholders in Fauci Ltd are to receive 10 ordinary shares in Anthony Ltd for every preference share held in Fauci Ltd. 3. Provide additional cash, to enable Fauci Ltd to pay off these liabilities: (i) an unrecorded liability of $3,100 and (ii) liquidation cost of $2,500; and 4. Contingent consideration: Pay extra cash of $101,000, if, in the subsequent year following the acquisition, revenue exceeds $20 million. The accountant advised that this contingent consideration should be recognised at its fair value of $85,000. Required: (a) Prepare the acquisition analysis of Fauci Ltd as at 26 June 2020. (6 marks) (b) Prepare the general journal entries in the records of Anthony Ltd at 26 June 2020 to record the business combination as per AASB 3/IFRS 3 Business combinations, based on the information above. Narrations are not required. (6 marks) (c) Record the accounting for liquidation: Prepare the Liquidation account, the Liquidator's Cash account and the Shareholders' Distribution account (in T-format) for Fauci Ltd as at 26 June 2020. (6 marks) On 26 June 2020 after a long negotiation, it was decided upon mutual agreement that Fauci Ltd sold all of its assets (except cash) and liabilities to Anthony Ltd. Fauci Ltd will liquidate immediately after the business combination has been completed. The Statement of Financial Position of Fauci Ltd as at 26 June 2020 was: Carrying amount Fair value Assets Land $ 25 590 $70,000 Vehicles (net) 97 750 97,750 Inventories 48 950 38,000 Plant 58 800 37,800 Accumulated depreciation - plant (21 000) Trademarks 78 000 160,000 Cash 20 575 Accounts receivable 55 750 55,750 Total assets $364 415 459,300 Equity Share capital - Ordinary at $1 each (fully paid) Share capital - Preference at $5 each (fully paid) Retained earnings Total equity 210 000 70 000 (14.050) 265 950 Liabilities Accounts payable Debentures (secured) Total liabilities Total equity and liabilities 25 465 73 000 98 465 $364 415 25,465 61,000 86.465 For this business combination, Anthony Ltd also incurred due diligence fee of $4,800 in undertaking this acquisition. Fauci Ltd also had another trademark that was not recorded because it had been internally generated. The trademark was fair valued at $12,000. In exchange, Anthony Ltd agreed to give Fauci Ltd the following: 1. The shareholders of Fauci Ltd would receive 2 ordinary shares in Anthony Ltd for every 5 ordinary shares held in Fauci Ltd. The fair value of these new ordinary shares was agreed to be $1.75 each. Costs to issue and registering the shares were $2,100. 2. The preference shareholders in Fauci Ltd are to receive 10 ordinary shares in Anthony Ltd for every preference share held in Fauci Ltd. 3. Provide additional cash, to enable Fauci Ltd to pay off these liabilities: (i) an unrecorded liability of $3,100 and (ii) liquidation cost of $2,500; and 4. Contingent consideration: Pay extra cash of $101,000, if, in the subsequent year following the acquisition, revenue exceeds $20 million. The accountant advised that this contingent consideration should be recognised at its fair value of $85,000. Required: (a) Prepare the acquisition analysis of Fauci Ltd as at 26 June 2020. (6 marks) (b) Prepare the general journal entries in the records of Anthony Ltd at 26 June 2020 to record the business combination as per AASB 3/IFRS 3 Business combinations, based on the information above. Narrations are not required. (6 marks) (c) Record the accounting for liquidation: Prepare the Liquidation account, the Liquidator's Cash account and the Shareholders' Distribution account (in T-format) for Fauci Ltd as at 26 June 2020. (6 marks)