In the beginning of year 1, Investor Ltd paid $1,545,300 for a 35% interest in Associate Ltd when the equity of Associate Ltd consisted of $3,000,000 share capital and $1,300,000 retained earnings. There has been no change in share capital of Associate Ltd since then. On this date, all the identifiable net assets of Associate Ltd were recorded at fair value except for overvalued inventory of $200,000 (which was all sold during year 1), undervalued machinery of $400,000 (with a 20% depreciation rate using the straight-line method), and overvalued equipment of $60,000 (with a 25% depreciation rate using the straight-line method). Both firms have a 30% income tax rate. Associate Ltd's statement of retained earnings for year 2 shows the follow information. Retained earnings, year 2 opening balance Profit Dividend Retained earnings, year 2 ending balance Additional information is as follows. $1,500,000 190,000 (10,000) 1,680,000 1. During year 2, Associate Ltd sold inventory costing $40,000 to Investor Ltd for $60,000. Investor Ltd sold 60% of this inventory by end of year 2. 2. At the end of year 1, Investor Ltd held inventory (purchased from Associate Ltd) with before- tax profit of $15,000. It has sold this inventory by end of year 2. 3. In the beginning of year 1, Associate Ltd sold some furniture costing $270,000 to Investor Ltd for $320,000. Investor Ltd applies a 20% rate using the straight-line method of depreciation. Required: 1) Calculate the amount of goodwill arising from investment in Associate Ltd. (6 marks) 2) Determine the balance of "Investment in Associate" at the end of year 1. (15 marks) 3) Determine the amount of "Profit from investment in Associate" for year 2 and provide a journal entry to record this amount on the books of Investor Ltd. (14 marks)