Question 1 X Company Purchases a (100%) controlling interest in Y Company by issuing $2,000,000 worth of common shares. An agreement was drawn whereby X Company would pay 10% of any earnings in excess of $750,000 to Y's shareholders in the first year following the acquisition. On that date, X's shares had a market value of $80 per share. Required (show your work and document any assumptions): a) Assuming that Y's net income was $950,000, prepare any journal entries (for company X) that you feel may be necessary to reflect Y's results under IFRS 3 Business Combinations. Assume that on the acquisition date no provision was made for the contingent consideration. (3 marks) b) Assuming that the agreement also called for Y's shareholders to be compensated with 1,250 shares for any decline in X's share price, what additional journal entries would be required under IFRS 3, if the market value of x's shares was expected to drop to $64 within the year, and at the end of the year the shares were indeed valued at $64? Include the initial entry at the acquisition date as well as the subsequent entry to settle the contingent consideration