V. Intercompany Investment (23 points) 1. In their 2005 annual report, Lenovo disclosed the following. Note that the diselosure is in ong Kong dollars and you may use Hong Kong dollars in your answer Business combinations On April 30, 2005, the Group completed the acquisition of IBM's global personal computer busi Business is approximately HKS10,400 million, including cash and the Company's shares Set forth below is a preliminary allocation of the purchase price (H ("IBM PC Business"). The estimated total consideration for acquiring the IBM PC KS 000,000) Purchase consideration: - Cash 5,958 Fair value of shares issued Total purchase consideration 4.442 10,400 The major components of identifiable assets and liabilities arising from the acquisition are as follows Fair value IBM Carrying value Property, plant and equipment Brands Liabilities 627 4,735 611 (5.199) Net identifiable assets acquired (liabilities assumed) 163 2201 (4,609 a. What journal entry would Lenovo have recorded on the transaction? Please split it out into the major asset and liability categories in the above table. (7 points) b. Suppose all of the preceding facts were the same, except that they had opted to pay 4,918 in cash and 4,442 in stock (a total of 90% x 10,400-9360) for a 90% ownership interest, what journal entry would they have recorded for the acquisition? (3 points) V. Intercompany Investment (23 points) 1. In their 2005 annual report, Lenovo disclosed the following. Note that the diselosure is in ong Kong dollars and you may use Hong Kong dollars in your answer Business combinations On April 30, 2005, the Group completed the acquisition of IBM's global personal computer busi Business is approximately HKS10,400 million, including cash and the Company's shares Set forth below is a preliminary allocation of the purchase price (H ("IBM PC Business"). The estimated total consideration for acquiring the IBM PC KS 000,000) Purchase consideration: - Cash 5,958 Fair value of shares issued Total purchase consideration 4.442 10,400 The major components of identifiable assets and liabilities arising from the acquisition are as follows Fair value IBM Carrying value Property, plant and equipment Brands Liabilities 627 4,735 611 (5.199) Net identifiable assets acquired (liabilities assumed) 163 2201 (4,609 a. What journal entry would Lenovo have recorded on the transaction? Please split it out into the major asset and liability categories in the above table. (7 points) b. Suppose all of the preceding facts were the same, except that they had opted to pay 4,918 in cash and 4,442 in stock (a total of 90% x 10,400-9360) for a 90% ownership interest, what journal entry would they have recorded for the acquisition? (3 points)