Lindale Ltd. is a multinational company with operations reselling technological products. Many of their products are acquired in locations where labour costs are cheaper. Tales Ltd. is a local business with a range of loyal suppliers. The location and the loyalty of their suppliers attracted the attention of the directors of Lindale Ltd. In January 2022, Tales Ltd. disclosed that their lack of cash flow has impacted upon their operations. During a meeting, the CEO of Lindale Ltd. stated 'they have management issues, which we don't. It is an easy fix for us'. In the same meeting, the CEO made a clear statement that this acquisition was to help their results 'look better'. On that occasion, the accounting department of Lindale Ltd. has discussed two possibilities concerning the consideration to be transferred in acquiring Tales Ltd. First, Lindale Ltd. could pay $200,000 for Tales Ltd., which would resolve all cash flow matters for Tales Ltd. The second option would be to transfer $300,000 to Tales Ltd. Before the acquisition, the average staff salary at Tales Ltd. was $80,000 per year on 30 June 2022. However, following the acquisition, this average decreased by 20% by 30 June 2023 (following the signing of new employment contracts which reduced many management activities from Tales' Ltd. employees to Lindale's Ltd. employees). On 30 June 2022, Lindale Ltd. decided to buy all the shares of Tales Ltd. which reported the following balances:

Share capital $180,000

Retained earnings $10,000

General Reserve $30,000

On the date of acquisition, all the assets and liabilities of Tales Ltd. were at fair value, except, a machine with a remaining useful life of 25 years, whose value was $20,000 above its fair value. The residual value for this machine is $2,000 and Tales Ltd. had been depreciating this asset using the straight-line method. On 30 June 2023, an accident occurred which affected the useful life and production of this machine, reducing its useful life to 23 years (there was no change to the residual value). On the same day. Tales Ltd. recognised a reduction of this asset of $12,000; while Lindale Ltd. estimates this reduction should be $15,000. Collapse ePortfolio Lecture Recordings Reading List The income tax rate is 30%. Office 365 Virtual Room Considering both scenarios (A and B): People Studiosity Online Study Help

A: Gain of bargain purchase of $6,000 with the transfer of $200,000.

B: Goodwill on purchase of $94,000 with the transfer of $300,000

1. Given both scenarios, critically evaluate which scenario is the best for relevant users (investors, shareholders, employees, suppliers, etc.). In your response, consider any ethical impacts from these scenarios.
2. Given your choice in question 1. prepare the adjusting journal entries for consolidation on 30 June 2022.
3. Given your choice in question 1, prepare all the relevant journal entries required for the consolidation worksheet on 30 June 2023