High Sky Ltd acquired 100% of the issued share capital of Low Land Ltd on 30 June 2019 for a cash consideration of $1,000,000. At that time the assets and liabilities of High Sky Ltd and Low Land Ltd were represented as follows:

High Sky Limited Low Land Ltd

Cash in bank 150,000 50,000

Deferred Tax Asset 0 0

Land 0 180,000

Furniture 0 20,000

Accumulated depreciation - furniture 0 (10,000)

Equipment 0 50,000

Accumulated depreciation - equipment 0 (10,000)

Building 0 200,000

Accumulated Depreciation - buildings 0 (80,000)

Investment in Low Land Ltd 500,000 0

Goodwill 0 0

Total Assets 650,000 400,000

Loan 0 70,000

Creditors 20,000 0

Deferred Tax Liability 0 0

Provision for legal claim 0 0

Share capital 500,000 300,000

Retained earnings 130,000 30,000

BCVR 0 0

Total Liabilities and Equity 650,000 400,000

When High Sky Limited acquired its investment in Low Land Ltd, the following information applied:

A.Land held by Low Land Ltd was undervalued by $12,000

B.Furniture held by Low Land Ltd was overvalued by $2,000. The furniture had originally cost $20,000 10 years ago and was being depreciated at 5% per year.

C.Equipment held by Low Land was undervalued by $4,000. The equipment had originally cost $50,000 2 years ago and was being depreciated at 10% per year.

D.A building held by Low Land Ltd was undervalued by $50,000. The building had originally cost $200,000 5 years ago and was being depreciated at 8% per year.

E.A contingent liability relating to an unsettled legal claim with a fair value of $10,000 was recorded in the notes to Low Land Ltd's financial statements

F.The tax rate is 30%

Required

1.Calculate the amount of goodwill/ (bargain purchase) acquired on acquisition.

2.Prepare the necessary journal entries to account for the business combination valuation reserve adjustments at acquisition date.

3.Prepare the consolidated worksheet using the following columns

Assets/ Liabilities/ Equity High Sky Limited Low Land Ltd Adjustments Group