On 1 January 2016 Anderson Ltd acquired 85% of the equity of Trinity Ltd at a cost of $430,000.

	$
Share Capital	300,000
General Reserve	50,000
Retained Earnings	90,000

At this date, Trinity Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:

	Carrying amount	Fair value
	$	$
Inventory	45,000	50,000
Plant (accumulated depreciation $300,000)	200,000	220,000

Additional information in relation to the acquisition a. All the inventory on hand at 1 January 2016 was sold by 31 December 2016. b. The plant has a remaining useful life of 12 years and will be depreciated on a straight-line basis. c. In December 2017 Anderson Ltd impaired the goodwill from the acquisition of Trinity Ltd by $10,000. A further impairment of $16,125 was made in December 2018. d. Trinity Ltd transferred $30,000 from its pre-acquisition retained earnings to the General reserve account, in December 2018. e. The tax rate is 30% Additional information regarding intragroup and other transactions Transactions for the 2016 financial year a. Trinity Ltds after-tax profit was $34,000. b. There were no intragroup transactions during the period. Transactions for the 2017 financial year a. Trinity Ltds after-tax profit was $30,000. b. In November 2017, Trinity Ltd sold inventory to Anderson Ltd for $27,000, and all inventory was still on hand as of 31 December 2017. The sale price included a 20% mark-up on the cost of sales.

Transactions for the 2018 financial year a. Trinity Ltds after-tax profit was $33,000. b. Anderson Ltd on sold all the remaining inventory from December 2017 by the end of February 2018. c. Anderson Ltd sold inventory to Trinity Ltd that had cost $7,800 for $ 9,000. As of 31 December 2018, 20% of that inventory was still held by Trinity Ltd. d. On 1 January 2018, Trinity Ltd sold a piece of equipment to Anderson Ltd for $15,000. The carrying value for Trinity Ltd was $12,000. The remaining useful life of the equipment is five years. Anderson Ltd continued to depreciate the equipment on a straight-line basis. e. During 2018, Trinity Ltd revalued land acquired post-acquisition by $40,000. The financial information of both companies on 31 December 2018 has been uploaded to a consolidating worksheet as follows:

	Anderson Ltd	Trinity Ltd
Sales Revenue	80,000	20,000
Cost of Sales	(20,000)	(8,000)
Other Expenses	(12,000)	(6,000)
Other revenue	31,000	8,500
Operating Profit	79,000	14,500
Income tax expense	(17,000)	(3,500)
Profit after tax	62,000	11,000
Retained earnings - 1 July 2018	200,000	160,000
Dividends declared	(40,000)	(8,000)
Retained earnings - 30 June 2019	222,000	163,000
Share Capital	800,000	300,000
General Reserve		80,000
Asset revaluation surplus - 1 July 2018	64,000
Revaluation of assets		28,000
Asset revaluation surplus - 30 June 2019	64,000	28,000
Total equity	1,086,000	571,000
Current Liabilities
Trade and other payable	21,000	8,000
Non-current liabilities
Loans	120,000	55,000
Deferred tax liability		12,000
Total non-current liabilities	120,000	67,000
Total Liabilities	141,000	75,000
Total liabilities and equity	1,227,000	646,000
Current assets
Cash	10,000	7,000
Trade and other receivables	40,000	48,000
Inventory	95,000	80,000
Total current assets	145,000	135,000
Non-current assets
Land	300,000	221,000
Plant	600,000	500,000
Accumulated depreciation & impairment - plant	(306,000)	(300,000)
Equipment	240,000	100,000
Accumulated depreciation - equipment	(192,000)	(25,000)
Investment in Trinity Ltd	430,000
Deferred tax asset	10,000	15,000
Total non-current assets	1,082,000	511,000
Total Assets	1,227,000	646,000

Required: 1. 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 on 1 January 2016 was $75,000. (9 marks) 2. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method. (3 marks) 3. Prepare the consolidation journal entries for Anderson Ltd using the partial goodwill method at 31 December 2016. (15 marks) 4. Prepare the consolidation journal entries for Anderson Ltd using the partial goodwill method at 31 December 2018. (38 marks) 5. Prepare the consolidation worksheet for the preparation of the consolidated financial statements for 31 December 2018. (35 marks) 6. Prepare the following financial statements for 31 December 2018: a. Consolidated statement of profit or loss and other comprehensive income (8 marks); b. Consolidated statement of financial position (7 marks); and c. Consolidated statement of changes in equity (5 marks). Note: Your consolidation journal entries for Required 4 should be prepared in the following format: (a) Business combination valuation entries at 31 December 2018 (b) Pre-acquisition entries at 31 December 2018 (c) NCI share of equity at 1 January 2016 (d) NCI share of equity changes from 1 January 2016 to 31 December 2017 (e) NCI share of equity changes from 1 January 2018 to 31 December 2018 (f) Intragroup transaction adjustments required as at 31 December 2018