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The trial balance of Packman Ltd at 1 January 2019 was as follows: Debit Credit Share capital Preference - 15 000 fully paid shares 15000

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The trial balance of Packman Ltd at 1 January 2019 was as follows: Debit Credit Share capital Preference - 15 000 fully paid shares 15000 Ordinary - 70 000 fully paid shares 70000 Retained earnings 43000 Equipment 84000 Accumulated depreciation - equipment 20000 Inventories 36000 Accounts receivable 33000 Investments 12000 Patents 7000 Debentures 8000 Accounts payable 16000 172000 172000 At this date, all the assets and liabilities of Packman Ltd are sold to Zaba Ltd, with Packman Ltd going into voluntary liquidation. The terms of acquisition are: (a) Zaba Ltd is to take over all the assets of Packman Ltd, as well as the accounts payable of Packman Ltd. (b) Costs of liquidation of $700 are to be paid by Packman Ltd with funds supplied by Zaba Ltd. (c) Preference shares in Packman Ltd are to receive two fully paid shares in Zaba Ltd for every three shares held, or alternatively, $0.80 per share in cash payable at the acquisition date. (d) Ordinary shareholders of Packman Ltd are to receive two fully paid ordinary shares in Zaba Lid for every share held or, alternatively, $2.50 in cash payable half at the acquisition date and half in one year's time. (e) Debenture holders of Packman Ltd are to be paid in cash out of funds provided by Zaba Ltd. The debentures have a fair value of $102 per $100 debenture. (f) All shares issued by Zaba Led have a fair value of $1.20 per share. g) Costs of issuing and registering the shares issued by Zaba Ltd amount to $80 for the preference shares and $200 for the ordinary shares. (h) Legal and accounting costs associated with the acquisition of Packman Ltd amount to $2000. The two parties agree on the terms of the arrangement, and holders of 6 000 preference shares and 10 000 ordinary shares elect to receive cash. Zaba Ltd assesses the fair values of the identifiable assets and liabilities of Packman Led to be as follows: Equipment 72000 Inventories 40000 Accounts receivable 29000 Patents 8000 Investments 12000 Accounts payable 16000 Zaba Ltd has an incremental borrowing rate of 10%. Required (a) Prepare the acquisition analysis in relation to the above acquisition by Zaba Ltd. (b) Prepare the journal entries in the records of Zaba Ltd at the date of acquisition. c) Prepare the journal entry for the payment of the deferred consideration in one year's time

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