1. Big Guy Inc. purchased 80% of the outstanding voting shares of Humble Corp. for $360,000 on July 1, 2017. On that date, Humble Corp. had common shares and retained earnings worth $180,000 and $90,000, respectively. The equipment had a remaining useful life of 5 years from the date of acquisition. Humble's bonds mature on July 1, 2027. Both companies use straight line amortization, and no salvage value is assumed for assets. The trademark is assumed to have an indefinite useful life. Goodwill is tested annually for impairment. The balance sheets of both companies, as well as Humble's fair market values on the date of acquisition are disclosed below:

   	Big Guy	Humble	Humble
   	(carrying value)	(carrying value)	(fair value)
   Cash	$800,000	$245,000	$245,000
   Accounts Receivable	$240,000	$40,000	$40,000
   Inventory	$60,000	$45,000	$50,000
   Equipment (net)	$900,000	$80,000	$72,000
   Trademark		$90,000	$193,000
   Total Assets	$2,000,000	$500,000
   Current Liabilities	$200,000	$160,000	$160,000
   Bonds Payable	$260,000	$70,000	$40,000
   Common Shares	$900,000	$180,000
   Retained Earnings	$640,000	$90,000
   Total Liabilities and Equity	$2,000,000	$500,000

   The following are the financial statements for both companies for the fiscal year ended June 30, 2020: Income Statements:

   	Big Guy	Humble
   Sales	$640,000	$240,000
   Investment Revenue	$8,480
   Less: Expenses:
   Cost of Goods Sold	$300,000	$160,000
   Depreciation	$81,000	$34,000
   Interest Expense	$34,000	$26,000
   Other Expenses	$5,000	$8,000
   Net Income	$228,480	$12,000

   Retained Earnings Statements

   	Big Guy	Humble
   Balance, July 1, 2019	$960,560	$48,000
   Net Income	$228,480	$12,000
   Dividends	$20,000	$2,000
   Balance, June 30, 2020	$1,169,040	$58,000

   Balance Sheets

   	Big Guy	Humble
   Cash	$1,200,000	$365,000
   Accounts Receivable	$270,000	$55,000
   Investment in Humble	$319,040
   Inventory	$70,000	$70,000
   Equipment (net)	$820,000	$65,000
   Trademark		$85,000
   Total Assets	$2,679,040	$640,000
   Current Liabilities	$350,000	$332,000
   Bonds Payable	$260,000	$70,000
   Common Shares	$900,000	$180,000
   Retained Earnings	$1,169,040	$58,000
   Total Liabilities and Equity	$2,679,040	$640,000

   An impairment test conducted in September 2018 on Big Guy's goodwill resulted in an impairment loss of $10,000 being recorded. Both companies use a FIFO system, and Humble's entire inventory on the date of acquisition was sold during the following year. During 2020, Humble Inc. borrowed $20,000 in cash from Big Guy Inc. interest free to finance its operations. Big Guy uses the Equity Method to account for its investment in Humble Corp. Assume that the fair value enterprise (FVE) method applies. The amount of depreciation expense appearing on Big Guy's June 30, 2020 consolidated income statement would be:

   		$113,400.
   		$113,720.
   		$115,000.
   		$116,280.