P3.1 Fair value of consideration transferred Scenario A A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date, 1 July 20x3. 1. Cash payment to owners of B Co.... $4,000,000 2. Loan payable to banks to finance the acquisition of B Co.. $3,200,000 3. Fair value of shares issued to owners of B Co... $5,000,000 4. Book value of shares issued to owners of B Co.. $4,000,000 5. Cost of issuing equity..... $40,000 6. Deferred consideration, payable at the end of 5 years. $8,000,000 7. Present value of deferred consideration at an interest rate of 5% p.a.. $6,268,209 Required: Prepare the journal entries that A Co would record to reflect the above transactions on 1 July 20x3. Unamortized discount or premium, where applicable, should be shown separately. Scenario B A Co acquired a controlling interest in B Co and entered into the following transactions on acquisition date, 1 July 20x3. 1. Cash payment to owners of B Co.... $1,000,000 2. Loan payable to banks to finance the acquisition of B Co.. $2,200,000 3. Fair value of land transferred to owners of B Co... $500,000 4. Book value of land transferred to owners of B Co... $400,000 5. Contingent refund, amount paid by seller at the end of 2 years. $300,000 6. Present value of $300,000 at an appropriate interest rate.. $272,109 7. Probability of refund occurring ...... 0.20 Required: Prepare the journal entries to record the above transactions on 1 July 20x3 in the books of A Co. Unamortized discount or premium, where applicable, should be shown separately