On 1 July 2017, Old Ltd acquired 100% of the share capital of School Ltd (cumdiv.) for $920,000. School Ltd's balance sheet on acquisition date included:

Dividend payable $20,000

Retained earnings 180,000

Share capital 600,000

General reserve 40,000

At acquisition date, all of School Ltd's net assets were recorded at fair value except for:

Carrying amount / Fair value

Inventory $32,000 / $40,000

Land 62,000/75,000

Contingent liability - /8,000

Buildings (Cost $100,000) 69,000 / 78,000

Additional Information

1. The dividend payable at acquisition date was subsequently paid in August 2017.
2. The revalued inventory was sold during the year ended 30 June 2018
3. The contingent liability identified on the acquisition of School Ltd still existed at 30 June 2020.
4. The revalued land was sold during the year ended 30 June 2020 for $52,000
5. The revalued buildings were still held at 30 June 2020 being depreciated on the straight-line basis at 15% per year
6. In May 2018, goodwill was impaired by $1,500. An additional $2,500 impairment occurred during the year ended 30 June 2020
7. Management fee revenues earned by Old Ltd during the year ended 30 June 2020 were collected from School Ltd
8. School Ltd's inventory balance at 1 July 2019 included an item previously purchased from Old Ltd. This inventory had been sold by Old Ltd to School Ltd at a profit of $6,500.
9. During the year ended 30 June 2020, School Ltd sold a quantity of inventory to Old Ltd for $12,000. This inventory had originally cost School Ltd $8,000 with 30% of this inventory still being held by Old Ltd at 30 June 2020.
10. All dividends paid/declared by Old Ltd during the year ended 30 June 2020 were from post-acquisition profits
11. Financial statements for the year ended 30 June 2020 are reproduced below:

Old Ltd / School Ltd

Sales $6,320,000/ $3,260,000

Cost of goods sold (3,060,000)/ (2,710,000)

Gross profit 3,260,000/ 550,000

Dividend revenue 83,000/ -

Interest revenue 18,000/ -

Management fees revenue 22,000/ -

Other income 30,000/ -

Loss on sale of land (10,000)/ -

Depreciation expense (180,000)/ (86,000)

Finance costs (91,000) / (35,000)

Other expenses (284,000) / (33,000)

Profit before income tax 2,840,000/ 404,000

Income tax expense (202,000) / (88,000)

Profit after tax 2,638,000 / 316,000

Retained earnings at (01/07/19) 695,000 / 322,000

Interim dividend paid (70,000 )/ (22,000)

Final dividend declared (140,000) / (61,000)

Retained earnings at (30/06/20) 3,123,000 / 555,000

Share capital 800,000/ 600,000

General reserve 210,000/40,000

Total equity 4,133,000/ 1,195,000

Trade and other payables 413,000/ 137,000

Dividend payable 1 40,000/ 61,000

Loan from School Ltd 300,000 / -

(6% per year, interest payable 31 December)

Mortgage loan 1,453,000 / 401,000

Deferred tax liabilities 90,000 / -

Total liabilities 2,396,000/ 599,000

Total liabilities and equity 6,529,000/ 1,794,000

Cash 194,000 / 115,000

Trade and other receivables 72,000 / 35,000

Dividends receivable 61,000 / -

Inventory 750,000 / 438,000

Land 770,000 / 250,000

Buildings 1,747,000 / 770,000

Accumulated depreciation buildings (320,000) / (454,000)

Plant and equipment 2,790,000 / 450,000

Accumulated depreciation plant and equipment (435,000) / (110,000)

Investment in School Ltd 900,000/ -

Loan to Old Ltd 300,000 / -

(6% per year, interest payable 31 December)

Total assets 6,529,000 / 1,794,000

Required

1. Determine the gain on bargain purchase or goodwill as at acquisition date.(3 marks
2. Prepare the consolidation journal entries for Old Ltd immediately after acquisition on 1 July 2017.(6marks)
3. Prepare the consolidation journal entries for Old Ltd as at 30 June 2020.(16 marks)
4. Prepare the consolidation worksheet for the preparation of the consolidated financial statements by Old Ltd as at 30 June 2020.(10 marks)