$3.$ Large Ltd$.$ purchased $75\%$ of Small Company on January $1,$ Year $6,$ for $$750,000,$ when the statement of financial position for Small showed common shares of $$540,000$ and retained earnings of $$240,000.$ On that date, the inventory of Small was undervalued by $$60,000,$ and a patent with an estimated remaining life of five years was overvalued by $$86,000.$

Small reported the following subsequent to January $1,$ Year $6$:

Profit $($Loss$)$ Dividends

Year $6$ $ $136,000$ $ $39,000$

Year $7(49,000)24,000$

Year $8104,00054,000$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

A test for goodwill impairment on December $31,$ Year $8,$ indicated a loss of $$20,700$ should be reported for Year $8$ on the consolidated income statement. Large uses the cost method to account for its investment in Small and reported the following for Year $8$ for its separate$-$entity statement of changes in equity:

Retained earnings, beginning $ $640,000$

Profit $340,000$

Dividends $(56,000)$

Retained earnings, end $ $924,000$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Required:

$($a$)$ Prepare the cost method journal entries of Large for each year. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Year $6$

Year $7$

Year $8$

$($b$)$ Compute the following on the consolidated financial statements for the year ended December $31,$ Year $8$: $($Omit $ sign in your response.$)$

$($i$)$ Goodwill

Goodwill $

$($ii$)$ Non$-$controlling interest on the statement of financial position

Non$-$controlling interest $

$($iii$)$ Retained earnings, beginning of year

Retained earnings, beginning of year $

$($iv$)$ Profit attributable to Large$$s shareholders

Profit attributable to Large$$s shareholders $

$($v$)$ Profit attributable to non$-$controlling interest

Profit attributable to non$-$controlling interest $

$($c$)$ Now assume that Large is a private entity, uses ASPE, and chooses to use the equity method to report its investment in Small.

$($i$)$ Prepare Large$$s journal entries for each year related to its investment in Small. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

Year $6$

Year $7$

Year $8$

$($ii$)$ Determine the investment in Small at December $31,$ Year $8.($Omit $ sign in your response.$)$

Investment in Small under equity method $