Question One (20 marks) Kha acquired 70% of the share capital of Sha three years ago. Kha paid initial cash consideration of $90,000. Kha also issued 3 $1 shares for every 4 acquired in Sha and agreed to pay a further $3000 in 3 years' time. The market value of Kha's shares at the date of acquisition of $1.5. Kha has only recorded the cash paid in respect of the investment in Sha. Current interest rates are 10%. The summarized statement of financial positions for the two entities as at 31 May 20X8. Sha Kha $ $ Non-current assets: 75,000 Property, plant & equipment 123,371 Investments 125,000 Current assets: Inventory 50,000 35,000 Receivables 40,000 20,000 5,000 343,371 130,000 Cash Total assets Equity: Share capital $1 90,000 10,000 Share premium 5,000 1000 Retained earnings 95,000 79,000 190,000 90,000 Non-current liabilities 25,000 15,000 Current liabilities: Account payable 63,000 8,000 Salaries and wages payable 65,371 17,000 Total equity and liabilities 343,371 130,000