ASSOCIATES (30 marks) On 1 July 2018, Aston Ltd, a parent entity, acquired 25% of the outstanding shares of Brendon Ltd at a cost of $160,000, paid in cash. It was assessed that Aston Ltd had the power to exercise significant influence over the operating and financial policies of Brendon Ltd. At the date of acquisition, the shareholders' equity of Brendon Ltd consisted of share capital of $360,000, retained earnings of $123,000, and general reserve of $90,000. All the identifiable net assets of Brendon Ltd were recorded at fair value, except for inventory with a carrying amount of $50,000 and a fair value of $75.000. Additional information: 1. Brendon Ltd transferred $30,000 to the general reserve from retained earnings in May 2021. 2. At 30 June 2020, the closing inventory of Brendon Ltd included inventory sold to it by Aston Ltd at a profit of $11,000. The entire inventory was sold by 30 June 2021. 3. On 1 July 2018, Brendon Ltd sold machinery to Aston Ltd for $85,000. The machine had a remaining life of five years. The machine originally cost Brendon Ltd $120,000 and had accumulated depreciation at the date of sale of $70,000. 4. There was no evidence that the investment account had to be impaired. 5. At 30 June 2021, Brendon Ltd reported a profit of $109,000 and paid dividends of $40,000. 6. The retained earnings of Brendon Ltd was $186,000 on 30 June 2019 and $245,000 on 30 June 2020 7. The income tax rate was 30%. Required: A. Calculate the amount of goodwill or bargain resulting from the acquisition. Show all your workings. (4 marks) B. Prepare all necessary equity accounting entries recorded by Aston Ltd on consolidation for its investment in Brendon Ltd for the financial year ended 30 June 2021. (22 marks) C. List two reasons for the use of equity accounting for investments in associates? (4 marks)