Large Ltd. purchased 80% of Small Company on January 1, Year 6, for $660,000, when the statement of financial position for Small showed common shares of $490,000 and retained earnings of $190,000. On that date, the inventory of Small was undervalued by $51,000, and a patent with an estimated remaining life of five years was overvalued by $76,000.

Small reported the following subsequent to January 1, Year 6:

	Profit (Loss)			Dividends
Year 6	$	116,000		$	34,000
Year 7		(44,000)			19,000
Year 8		99,000			49,000

A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,200 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	$	590,000
Profit		290,000
Dividends		(61,000)
Retained earnings, end	$	819,000

(a) 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 Larges journal entries for each year related to its investment in Small. (Omit $ sign in your response.)

Year 6

General Journal	Debit	Credit
(Click to select) Cash Investment in Small Account receivable Current assets Long-term investment Dividend income Goodwill Inventories
(Click to select) Current assets Dividend income Long-term investment Cash Inventories Goodwill Account receivable Investment in Small
To record the purchase of 80% of Small Company
(Click to select) Investment in Small Dividend income Long-term investment Current assets Account receivable Cash Inventories Equity method income
(Click to select) Long-term investment Current assets Goodwill Equity method income Dividend income Account receivable Investment in Small Inventories
To record 80% of Small Company year 6 net income
(Click to select) Inventories Account receivable Goodwill Cash Dividend income Investment in Small Long-term investment Current assets
(Click to select) Current assets Account receivable Cash Investment in Small Long-term investment Dividend income Inventories Goodwill
To record 80% of the dividend received from Small Company
(Click to select) Goodwill Inventories Account receivable Investment in Small Current assets Equity method income Cash Long-term investment
(Click to select) Investment in Small Current assets Dividend income Inventories Goodwill Equity method income Cash Long-term investment
To record 80% of acquisition differential amortization and impairment of year 6

Year 7

General Journal	Debit	Credit
(Click to select) Equity method loss Investment in Small Account receivable Equity method income Cash Inventories Current assets Dividend income Long-term investment
(Click to select) Long-term investment Inventories Dividend income Current assets Investment in Small Equity method income Account receivable Cash
To record 80% of Small Company year 7 net loss
(Click to select) Account receivable Inventories Dividend income Investment in Small Cash Equity method income Current assets Long-term investment
(Click to select) Equity method income Cash Investment in Small Long-term investment Current assets Inventories Account receivable Dividend income
To record 80% of the dividend received from Small Company
(Click to select) Current assets Long-term investment Dividend income Investment in Small Cash Account receivable Equity method income Inventories
(Click to select) Account receivable Investment in Small Goodwill Equity method income Long-term investment Current assets Cash Equity method loss Inventories
To record 80% of acquisition differential amortization and impairment of year 7

Year 8

General Journal	Debit	Credit
(Click to select) Dividend income Inventories Equity method income Cash Long-term investment Account receivable Current assets Investment in Small
(Click to select) Account receivable Investment in Small Long-term investment Cash Inventories Equity method income Current assets Dividend income
To record 80% of Small Company year 8 net income
(Click to select) Goodwill Dividend income Cash Investment in Small Long-term investment Account receivable Current assets Inventories
(Click to select) Current assets Dividend income Long-term investment Account receivable Goodwill Cash Investment in Small Inventories
To record 80% of the dividend received from Small Company
(Click to select) Investment in Small Dividend income Current assets Equity method income Long-term investment Inventories Cash Account receivable
(Click to select) Investment in Small Current assets Equity method income Dividend income Long-term investment Account receivable Cash Inventories
To record 80% of acquisition differential amortization and impairment of year 8

(ii) Determine the investment in Small at December 31, Year 8. (Omit $ sign in your response.)

Investment in Small under equity method $