Butter Ltd acquired 80% of the share capital of Scotch Ltd for $330,000 (cum div.) on 1 July 2015. The statement of financial position at acquisition date of Scotch Ltd, including comparative information on fair values for assets is shown below:

Carrying amount Fair value Current assets Cash 5,000 Inventory 60,000 67,000 Accounts receivable 40,000 Allowance for doubtful debts 5,000 35,000 35,000 Total current assets 100,000 Non-current assets Plant and machinery (at cost) 200,000 Accumulated depreciation - plant and machinery (125,000) 75,000 90,000 Vehicles (at cost) 80,000 Accumulated depreciation - vehicles (10,000) 70,000 Buildings (at cost) 120,000 Accumulated depreciation - buildings (5,000) 115,000 115,000 Trademark (at valuation) 100,000 100,000 Other assets 40,000 Goodwill 20,000 Total non-current assets 420,000 Total assets 520,000 Current liabilities Accounts payable 40,000 Dividend payable 20,000 Total current liabilities 60,000 Non-current liabilities Debentures 155,000 Total non-current liabilities 155,000 Total liabilities 215,000 Equity Retained earnings 55,000 Share capital 200,000 Asset revaluation surplus 50,000 Total equity 305,000 Total equity and liabilities 520,000

The depreciable assets had the following remaining useful lives at 1 July 2015:

Plant and machinery 4 years Vehicles 10 years Buildings 10 years

All the inventory on hand at 1 July 2015 was sold by Scotch Ltd by 30 June 2016. Adjustments for differences between fair values and carrying amounts at acquisition date are made on consolidation.

Additional information:

a) The dividend payable in the records of Scotch Ltd at 1 July 2015 was paid in August 2015.

b) On 1 January 2018, one of the machines that was on hand in Scotch Ltd at 1 July 2015 was sold at a gain of $6,000. At 1 July 2015, the machine was recorded at cost of $50,000 with accumulated depreciation of $30,000, and had a fair value of $23,000. Any related revaluation surplus was transferred on consolidation to retained earnings.

c) During the 2018 financial year, Scotch Ltd transferred $10,000 from the asset revaluation surplus (on hand at 1 July 2015) to retained earnings, and transferred $20,000 to general reserve from retained earnings.

d) Information on dividends paid and declared during the 2018 financial year is as follows: - paid a $7,000 dividend declared in the previous period; - paid a $4,000 interim dividend; - declared, in June 2018, an $3,000 dividend. Butter Ltd recognises dividends prior to receipt. e) Information on inventory sold by Scotch Ltd to Butter Ltd at a mark-up of 20%:

- At 1 July 2017 Butter Ltd had $15,000 of inventory on hand which was sold by 30 June 2018. - During the 20172018 period, $30,000 worth of inventory was sold, with 25% still on hand at Butter Ltd on 30 June 2018. f) On 1 July 2016, Scotch Ltd sold a vehicle to Butter Ltd at a profit before tax of $5,000. Butter Ltd depreciates vehicles at a rate of 10% per year on cost while Scotch Ltd applies a rate of 20% per year on cost.

g) The retained earnings balance at 30 June 2017 in Scotch Ltd was $60,000. The total comprehensive income for the year ended 30 June 2018 was $28,000, including $3,000 due to revaluation of land measured using the revaluation model. The asset revaluation surplus balance at 30 June 2017 for Scotch Ltd was $54,000. h) The tax rate is 30%.

Required: 1. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method. (3 marks) 2. Determine the gain on bargain purchase or goodwill as at acquisition date using the full goodwill method. Assume the fair value of the Non-controlling interest at 1 July 2015 was $68,000. (4 marks) 3. Prepare the consolidation journal entries for Butter Ltd using the full goodwill method at 1 July 2015, immediately after acquisition. (8 marks) 4. Prepare the consolidation journal entries for Butter Ltd using the full goodwill method at 30 June 2018. (20 marks)