Zeller Ltd acquired the business of Adams Ltd for a cash outlay of \($5\) 000 000 on 1 July 2025. The summarised balance sheet of Adams Ltd on that date was as follows.

Most of the assets were recorded at fair value except for inventories and land, which were assessed to have fair values of \($1\) 000 000 and \($1\) 100 000 respectively.
Required

(a) Determine the amount that Zeller Ltd should record as goodwill or gain on bargain purchase on 1 July 2025.

(b) Prepare journal entries in the records of Zeller Ltd to acquire the business of Adams Ltd on 1 July 2025.

(c) Discuss how your answer would differ if Zeller Ltd had paid \($3\) 800 000 cash to acquire the business of Zeller Ltd.

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ADAMS LTD Summarised Balance Sheet as at 1 July 2025 Assets Cash at bank Accounts receivable Inventories Land Plant and equipment (net) Total assets Liabilities and equity Accounts payable $185 000 370 000 870 000 740 000 2 800 000 $4.965 000 Bank loan payable Share capital Retained earnings Total liabilities and equity 520 000 1 350 000 2 250 000 845 000 $ 4.965 000