Giant acquired all of Smalls 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, $64,500 of the fair-value price was attributed to undervalued land while $72,000 was assigned to undervalued equipment having a 10-year remaining life. The $63,500 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 $11,100. Small declared and paid dividends in the same period. Credits are indicated by parentheses.

	Giant				Small
Revenues	$	(1,298,200	)		$	(446,500	)
Cost of goods sold		618,000				118,500
Depreciation expense		208,000				172,000
Equity in income of Small		(148,800	)			0
Net income	$	(621,000	)		$	(156,000	)
Retained earnings, 1/1/18	$	(1,280,000	)		$	(712,000	)
Net income (above)		(621,000	)			(156,000	)
Dividends declared		280,000				90,000
Retained earnings, 12/31/18	$	(1,621,000	)		$	(778,000	)
Current assets	$	329,000			$	344,000
Investment in Small		1,112,000				0
Land		447,000				253,000
Buildings (net)		398,000				439,000
Equipment (net)		503,000				353,000
Goodwill		0				0
Total assets	$	2,789,000			$	1,389,000
Liabilities	$	(918,000	)		$	(441,000	)
Common stock		(250,000	)			(170,000	)
Retained earnings(above)		(1,621,000	)			(778,000	)
Total liabilities and equities	$	(2,789,000	)		$	(1,389,000	)

1. How was the $148,800 Equity in Income of Small balance computed?
2. Determine the totals to be reported by this business combination for the year ending December 31, 2018.
3. Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018.
4. 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?

   GIANT COMPANY AND SMALL COMPANY
   Consolidation Worksheet
   For Year Ending December 31, 2018
   			Consolidation Entries
   Accounts	Giant	Small	Debit	Credit	Consolidated Totals
   Revenues	$(1,298,200)	$(446,500)
   Cost of goods sold	618,000	118,500
   Depreciation expense	208,000	172,000
   Equity income of Small	(148,800)	0
   Net income	$(621,000)	$(156,000)			$0
   Retained earnings 1/1	$(1,280,000)	$(712,000)
   Net income (above)	(621,000)	(156,000)			0
   Dividends declared	280,000	90,000
   Retained earnings 12/31	$(1,621,000)	$(778,000)			$0
   Current assets	$329,000	$344,000
   Investment in Small	1,112,000	0
   Land	447,000	253,000
   Buildings (net)	398,000	439,000
   Equipment (net)	503,000	353,000
   Goodwill	0	0
   Total assets	$2,789,000	$1,389,000			$0
   Liabilities	$(918,000)	$(441,000)
   Common stock	(250,000)	(170,000)
   Retained earnings (above)	(1,621,000)	(778,000)			0
   Total liabilities and equity	$(2,789,000)	$(1,389,000)	0	0	$0