Item 6 Item 6 4 2 points 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, $66,500 of the fair value price was attributed to undervalued land while $62,000 was assigned to undervalued equipment having a 10 year remaining life The $71,500 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 $17,300 Small declared and paid dividends in the same period Credits are indicated by parentheses Giant Small Revenues $ (1,243,700 ) $ (519,000 ) Cost of goods sold 581,000 125,000 Depreciation expense 218,500 165,000 Equity in income of Small (222,800 ) 0 Net income $ (667,000 ) $ (229,000 ) Retained earnings, 1 1 18 $ (1,880,000 ) $ (627,000 ) Net income (above) (667,000 ) (229,000 ) Dividends declared 310,000 110,000 Retained earnings, 12 31 18 $ (2,237,000 ) $ (746,000 ) Current assets $ 745,000 $ 210,000 Investment in Small 1,085,000 0 Land 464,000 254,000 Buildings (net) 394,000 474,000 Equipment (net) 653,000 365,000 Goodwill 0 0 Total assets $ 3,341,000 $ 1,303,000 Liabilities $ (854,000 ) $ (387,000 ) Common stock (250,000 ) (170,000 ) Retained earnings(above) (2,237,000 ) (746,000 ) Total liabilities and equities $ (3,341,000 ) $ (1,303,000 ) How was the $222,800 Equity in Income of Small balance computed Determine the totals to be reported by this business combination for the year ending December 31, 2018 Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018 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

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Item 6 Item 6 4.2 points Giant acquired all of Smalls common stock on January 1, 2014, in exchange for cash of $770,000. On that

Item 6

Item 6 4.2 points

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, $66,500 of the fair-value price was attributed to undervalued land while $62,000 was assigned to undervalued equipment having a 10-year remaining life. The $71,500 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 $17,300. Small declared and paid dividends in the same period. Credits are indicated by parentheses.

	Giant			Small
Revenues	$	(1,243,700	)	$	(519,000	)
Cost of goods sold		581,000			125,000
Depreciation expense		218,500			165,000
Equity in income of Small		(222,800	)		0
Net income	$	(667,000	)	$	(229,000	)
Retained earnings, 1/1/18	$	(1,880,000	)	$	(627,000	)
Net income (above)		(667,000	)		(229,000	)
Dividends declared		310,000			110,000
Retained earnings, 12/31/18	$	(2,237,000	)	$	(746,000	)
Current assets	$	745,000		$	210,000
Investment in Small		1,085,000			0
Land		464,000			254,000
Buildings (net)		394,000			474,000
Equipment (net)		653,000			365,000
Goodwill		0			0
Total assets	$	3,341,000		$	1,303,000
Liabilities	$	(854,000	)	$	(387,000	)
Common stock		(250,000	)		(170,000	)
Retained earnings(above)		(2,237,000	)		(746,000	)
Total liabilities and equities	$	(3,341,000	)	$	(1,303,000	)

How was the $222,800 Equity in Income of Small balance computed?

Determine the totals to be reported by this business combination for the year ending December 31, 2018.

Prepare a consolidation worksheet for Giant and Small for the year ending December 31, 2018.

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?