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Giant acquired all of Small's common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of

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Giant acquired all of Small's 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, $77,500 of the fair- value price was attributed to undervalued land while $53,000 was assigned to undervalued equipment having a 10- year remaining life. The $69,500 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 The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $18,900. Small declared and paid dividends in the same period. Credits are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Equity in income of Small Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Current assets Investment in Small Land Buildings (net) Equipment (net) Goodwill Giant Small $(1,228,300) $ (450,500) 555,000 91,500 214,000 174,000 (179, 700) $ (639,000) $ (185,000) $(1,890,000) $ (644,000) (639,000) (185,000) 320,000 120,000 $12,209,000) $ (709,000) $ 746,500 $ 177,000 1,052,500 @ 505,000 238,000 329,000 500,000 678,000 342,000 @ 0 - Ann Equity income of Small Net income (179,700) (639.000) $ $ 0 (185,000) Retained earning, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 S (1,890.000) $ (639,000) 320,000 $ (2,209,000) $ (644,000) (185,000) 120,000 (709,000) $ Current assets Investment in Small Land 746,500 $ 177,000 1,052,500 0 505,000 238,000 329,000 500,000 678,000 342.000 0 0 3,311,000 $ 1,257.000 Buildings (net) Equipment (net) Goodwill Total assets $ Liabilities Common stock Retained earnings (above) Total liabilities and equity $ (852,000) $ (378,000) (250,000) (170,000) (2.209,000) (709,000) $ (3,311,000) $ (1,257,000) 0 > Required D 7 of 7

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