Giant acquired all of Small's common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $42,500 of the fair-value price was attributed to undervalued land while $96,000 was assigned to undervalued equipment having a 10-year remaining life. The $61,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment. Following are individual financial statements for the year ending December 31, 2018. On that date, Small owes Giant $12,100. Small declared and paid dividends in the same period. Credits are indicated by parentheses. $ Small (473,000) 122,000 178,000 $ $ Revenues Cost of goods sold Depreciation expense Equity in income of Small Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Small Land Buildings (net) Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equities Giant $ (1,324,600) 631,000 200,000 (163,400) $ (657,000) $ (1,460,000) (657,000) 320,000 $ (1,797,000) $ 298,000 1,014,000 502,000 401,000 738,000 (173,000) (639,000) (173,000) 120,000 (692,000) 164,000 $ $ 263,000 489,000 352,000 $ 2,953,000 $ (906,000) (250,000) (1,797,000 $ (2,953,000) $ 1,268,000 $ (406,000) (170,000) (692,000) $ (1,268,000) a. How was the $163,400 Equity in Income of Small balance computed? b. Determine the totals to be reported by this business combination for the year ending December 31, 2018. c. Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018. d. If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2018, what journal entry would Giant make to record such impairment? Required A Required B Required C Required D How was the $163,400 Equity in Income of Small balance computed? Equity accrual Less: Amortization expense Equity in Income of Small Required A Required B Required C Required D Determine the totals to be reported by this business combination for the year ending December 31, 2018. Totals Revenues Cost of goods sold Depreciation expense Income of Small Net income Retained earnings, 1/1/18 Dividends declared Retained earnings, 12/31/18 Current assets Investment in Small Land Building (net) Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equity Required A Required B Required C Required D Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) Show less Accounts Co GIANT COMPANY AND SMALL COMPANY Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Giant Small Debit Credit $ (1,324,600) S (473,000) 631,000 122,000 200,000 178,000 (163,400) $ (657,000) $ (173,000) Totals Revenues Cost of goods sold Depreciation expense Equity income of Small Net income $ 0 $ Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 $ (1,460,000) (657,000) 320,000 $ (1,797,000) (639,000) (173,000) 120,000 (692,000) S Current assets S Investment in Small Land Buildings (net) Equipment (net) Goodwill Total assets 298,000 1,014,000 502,000 401,000 738,000 164,000 of 263,000 489,000 352,000 0 $ 2,953,000 $ 1,268,000 $ 0 Liabilities Common stock Retained earnings (above) Total liabilities and equity $ (906,000) $ (406,000) (250,000) (170,000) (1,797,000) (692,000) 5 (2,953,000) S (1,268,000) 0 0 Required A Required B Required C Required D If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2018, what journal entry would Giant make to record such impairment? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet ( 1 Record the loss on impairment of goodwill. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Giant acquired all of Small's common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $42,500 of the fair-value price was attributed to undervalued land while $96,000 was assigned to undervalued equipment having a 10-year remaining life. The $61,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment. Following are individual financial statements for the year ending December 31, 2018. On that date, Small owes Giant $12,100. Small declared and paid dividends in the same period. Credits are indicated by parentheses. $ Small (473,000) 122,000 178,000 $ $ Revenues Cost of goods sold Depreciation expense Equity in income of Small Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Small Land Buildings (net) Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equities Giant $ (1,324,600) 631,000 200,000 (163,400) $ (657,000) $ (1,460,000) (657,000) 320,000 $ (1,797,000) $ 298,000 1,014,000 502,000 401,000 738,000 (173,000) (639,000) (173,000) 120,000 (692,000) 164,000 $ $ 263,000 489,000 352,000 $ 2,953,000 $ (906,000) (250,000) (1,797,000 $ (2,953,000) $ 1,268,000 $ (406,000) (170,000) (692,000) $ (1,268,000) a. How was the $163,400 Equity in Income of Small balance computed? b. Determine the totals to be reported by this business combination for the year ending December 31, 2018. c. Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018. d. If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2018, what journal entry would Giant make to record such impairment? Required A Required B Required C Required D How was the $163,400 Equity in Income of Small balance computed? Equity accrual Less: Amortization expense Equity in Income of Small Required A Required B Required C Required D Determine the totals to be reported by this business combination for the year ending December 31, 2018. Totals Revenues Cost of goods sold Depreciation expense Income of Small Net income Retained earnings, 1/1/18 Dividends declared Retained earnings, 12/31/18 Current assets Investment in Small Land Building (net) Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equity Required A Required B Required C Required D Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) Show less Accounts Co GIANT COMPANY AND SMALL COMPANY Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Giant Small Debit Credit $ (1,324,600) S (473,000) 631,000 122,000 200,000 178,000 (163,400) $ (657,000) $ (173,000) Totals Revenues Cost of goods sold Depreciation expense Equity income of Small Net income $ 0 $ Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 $ (1,460,000) (657,000) 320,000 $ (1,797,000) (639,000) (173,000) 120,000 (692,000) S Current assets S Investment in Small Land Buildings (net) Equipment (net) Goodwill Total assets 298,000 1,014,000 502,000 401,000 738,000 164,000 of 263,000 489,000 352,000 0 $ 2,953,000 $ 1,268,000 $ 0 Liabilities Common stock Retained earnings (above) Total liabilities and equity $ (906,000) $ (406,000) (250,000) (170,000) (1,797,000) (692,000) 5 (2,953,000) S (1,268,000) 0 0 Required A Required B Required C Required D If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2018, what journal entry would Giant make to record such impairment? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet ( 1 Record the loss on impairment of goodwill. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal