Giant acquired all of Smalls common stock on January 1, 2017, 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, $74,400 of the fair-value price was attributed to undervalued land while $65,000 was assigned to undervalued equipment having a 10-year remaining life. The $60,600 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.

The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $14,500. Small declared and paid dividends in the same period. Credits are indicated by parentheses.

	Giant				Small
Revenues	$	(1,261,000	)		$	(505,500	)
Cost of goods sold		605,000				122,500
Depreciation expense		210,500				144,000
Equity in income of Small		(232,500	)			0
Net income	$	(678,000	)		$	(239,000	)
Retained earnings, 1/1/21	$	(1,790,000	)		$	(715,000	)
Net income (above)		(678,000	)			(239,000	)
Dividends declared		290,000				110,000
Retained earnings, 12/31/21	$	(2,178,000	)		$	(844,000	)
Current assets	$	604,500			$	385,000
Investment in Small		1,181,500				0
Land		472,000				224,000
Buildings (net)		325,000				494,000
Equipment (net)		735,000				333,000
Goodwill		0				0
Total assets	$	3,318,000			$	1,436,000
Liabilities	$	(890,000	)		$	(422,000	)
Common stock		(250,000	)			(170,000	)
Retained earnings(above)		(2,178,000	)			(844,000	)
Total liabilities and equities	$	(3,318,000	)		$	(1,436,000	)

1. How was the $232,500 Equity in Income of Small balance computed?
2. Determine the totals to be reported by this business combination for the year ending December 31, 2021.
3. Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2021.
4. If Giant determined that the entire amount of goodwill from its investment in Small was impaired in 2021, what journal entry would Giant make to record such impairment?

Required A Required B Required C Required D How was the $232,500 Equity in Income of Small balance computed? 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, 2021. (Input all amounts as positive values.) Totals Revenues Cost of goods sold Depreciation expense Income of Small Net income Retained earnings, 1/1/21 Dividends declared Retained earnings, 12/31/21 Current assets Investment in Small Land Building (net) Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equity Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2021. (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. Input all amounts as positive values.) Show less GIANT COMPANY AND SMALL COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Giant Small Debit Credit Consolidated Totals Revenues Cost of goods sold Depreciation expense Equity income of Small Net income $ (1,261,000) $ 605,000 210,500 (232,500) $ (678,000) $ (505,500) 122,500 144,000 0 (239,000) Retained earning, 1/1/21 Net income (above) Dividends declared $ (1,790,000) $ (678,000) 290,000 $ (2,178,000) $ (715,000) (239,000) 110,000 (844,000) Retained earnings, 12/31/21 $ 385,000 Current assets Investment in Small 0 Land Buildings (net) Equipment (net) Goodwill 604,500 $ 1,181,500 472,000 325,000 735,000 224,000 494,000 333,000 0 0 Total assets $ 3,318,000 $ 1,436,000 Liabilities Common stock $ (890,000) (250,000) (2,178,000) $ (3,318,000) $ (422,000) (170,000) (844,000) $ (1,436,000) Retained earnings (above) Total liabilities and equity 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 2021, 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 Record the loss on impairment of goodwill. Transaction General Journal Debit Credit 1