On 1 July 2017, Peach Ltd acquired 75% of the issued shares of Watermelon Ltd at a cost of $35,000. At this date, the equity of Watermelon Ltd consisted of:

Share capital ($1 each fully paid)	$30,000
Retained earnings	6,000

At 1 July 2017, Watermelon Ltd had not recorded any goodwill, and all the identifiable assets and liabilities of Watermelon Ltd were recorded at fair value, except for:

	Carrying amount	Fair value
Plant (cost = $15,000)	10,000	14,000

The plant was estimated to have a further 5-year life. The trial balances of the two companies as at 30 June 2021 are as follows:

	Peach Ltd		Watermelon Ltd
	Dr	Cr	Dr	Cr
Share capital		$40,000		$30,000
Retained earnings (1/7/20)		26,400		14,500
Other components of equity		-		5,000
Current tax liability		8,500		2,900
Plant	$30,000		$60,000
Accumulated depreciation plant		17,000		30,500
Shares in Watermelon Ltd	35,000		-
10% debentures in Watermelon Ltd	2,500		-
Inventory	12,000		15,500
Cash	14,050		500
Financial assets	-		11,000
Deferred tax asset	2,000		5,000
Sales revenue		50,000		75,000
Cost of sales	34,000		58,500
Gain on sale of plant		-		5,000
Selling expenses	4,000		6,000
Other expenses	1,500		1,500
Financial expenses	1,500		2,000
Income tax expense	5,000		5,500
Interest received from debentures		250	-
Dividend revenue		1,800	-
Dividend paid	-		2,400
10% debentures	2,400			5,000
	143,950	143,950	167,900	167,900

Additional information

1. On 1 January 2021, Watermelon Ltd sold plant to Peach Ltd for $7,000. The plant had a carrying amount of $2,000 in the records of Watermelon Ltd at time of sale. The asset was classified as inventory by Peach Ltd. It remained unsold at 30 June 2021.
2. Unrealised profits on inventory held at 30 June 2020: Inventory held by Peach Ltd purchased from Watermelon Ltd at a profit before tax of $800. This inventory was sold by 30 June 2021.
3. Intragroup sales of inventories for the year ended 30 June 2021 from Watermelon Ltd to Peach Ltd: $19,000. Unrealised profits on inventories held at 30 June 2021: inventories held by Peach Ltd purchased from Watermelon Ltd at a profit before tax of $1,200.
4. Peach Ltd issued debentures to Watermelon Ltd on 1 July 2020 with a 10% interest rate, payable on 30 June 2021.
5. The Other Components of Equity account relates to financial assets held by Watermelon Ltd. The balance of this account at 1 July 2020 was $4,000.
6. The tax rate is 30%.

Required:

1. Determine the gain on bargain purchase or goodwill as at acquisition date using the partial goodwill method. (3 marks)
2. 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 July 2017 was $10,000. (4 marks)
3. Prepare the consolidation journal entries using the full-goodwill method at 1 July 2017. (6 marks)
4. Prepare the consolidation journal entries using the full-goodwill method at 30 June 2021. These consolidation journal entries should be prepared in the following format:
   1. Business combination valuation entries at 30 June 2021
   2. Pre-acquisition entries at 30 June 2021
   3. NCI share of equity at 1 July 2017
   4. NCI share of equity changes from 1 July 2017 to 30 June 2020
   5. NCI share of equity changes from 1 July 2020 to 30 June 2021
   6. Intra-group transaction adjustments required as at 30 June 2021 (22 marks)