Large Company acquired for 80% of the voting stock of Small Company on January 1, 2013 paying $10,000,000 in cash. Large accounts for its investment using the equity method. Small's stockholders equity at the date of acquisition was $6,000,000 ($2,000,000 capital stock, $4,000,000 retained earnings). The estimated fair value of the non-controlling interest in Small Company at the date of acquisition is $2,400,000. As of the date of acquisition: PPE Overvalued by $3,000,000 20-year useful life, straight-line Identifiable intangibles Undervalued by $5,500,000 10-year useful life, straight-line Long-term debt Undervalued by $100,000 5-year till maturity, straight-line Goodwill Impairment: $625,000 in total for 2013-2019; $50,000 for 2020 Note: The impairment in goodwill is distributed between controlling and non-controlling interest based on the percentage of goodwill each of them gets (for example, if the non-controlling interest gets 5% of the entire goodwill, they also get 5% of the impairment). The 2020 pre-closing trial balances for Large and Small are (in thousands): Large Company Small Company Dr (Cr) Dr (Cr) Sales revenue (35,000) (20,000) Equity in net income of Small (359) Cost of goods sold 29,000 14,000 Other operating expenses 5,700 5,100 Net Income 659 (900) Current assets 20,000 6,000 Plant & equipment, net 55,000 29,700 Investment in Small 12,327 Total Assets 87,327 35,700 Current liabilities (15,000) (6,000) Long-term debt (20,000) (17,000) Capital stock (30,000) (2,000) Retained earnings, Jan. 1 (21,768) (10,000) Net Income (659) (900) Dividends 100 200 Total Liah and Equity (87,327) (35,700)