• Large Ltd. purchased 70% of Small Company on January 1, Year 6, for $770,000, when the statement of financial position for Small showed common shares of $560,000 and retained earnings of $260,000. On that date, the inventory of Small was undervalued by $71,000, and a patent with an estimated remaining life of five years was overvalued by $90,000. Small reported the following subsequent to January 1, Year 6: Profit (Loss) Dividends Year 6 $ 144,000 $ 41,000 Year 7 -51,000 26,000 Year 8 106,000 56,000 A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,900 should be reported for Year 8 on the consolidated income statement. Large uses the cost method to account for its investment in Small and reported the following for Year 8 for its separate-entity statement of changes in equity: Retained earnings, beginning $ 660,000 Profit 360,000 Dividends -54,000 Retained earnings, end $ 966,000 Required: (a) Prepare the cost method journal entries of Large for each year. Year 6: i) To record the purchase of 70% of Small Company. ii) To record dividend received from Small Company. Year 7: i) To record dividend received from Small Company. Year 8: i) To record dividend received from Small Company. (b) Compute the following on the consolidated financial statements for the year ended December 31, Year 8: i) Goodwill ii) Non-controlling interest on the statement of financial position iii) Retained earnings, beginning of year (iv) Profit attributable to Large’s shareholders (v) Profit attributable to non-controlling interest (c) Now assume that Large is a private entity, uses ASPE, and chooses to use the equity method to report its investment in Small. (i) Prepare Large’s journal entries for each year related to its investment in Small. Year 6: i) To record the purchase of 70% of Small Company. ii) To record 70% of Small Company year 6 net income. iii) To record 70% of the dividend received from Small Company. iv) To record 70% of acquisition differential amortizat