Large Ltd. purchased 80% of Small Company on January 1, Year 6, for $760,000, when the statement of financial position for Small showed common shares of $550,000 and retained earnings of $250,000. On that date, the inventory of Small was undervalued by $70,000, and a patent with an estimated remaining life of five years was overvalued by $88,000. Small reported the following subsequent to January 1, Year 6: Profit Dividends (Loss) $140,000 (50,000) 105,000 $40,000 Year 6 25,000 55,000 Year 7 Year 8 A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,800 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 $650,000 350,000 Profit Dividends (55,000) $945,000 Retained earnings, end Required: (a) Prepare the cost method journal entries of Large for each year. (Omit $sign in your response.) Year 6 General Journal Debit Credit (Click to select) (Click to select) To record the purchase of 80s of Small Company (Click to select) (Click to select) To record dividend received from Small Company Year 7 Debit General Journal Credit (Click to select) (Click to select) To record dividend received from Small Company Year 8 Credit General Journal Debit (Click to select) (Click to select) To record dividend received from Small Company (b) Compute the following on the consolidated financial statements for the year ended December 31, Year 8: (Omit $ sign in your response.) (i) Goodwill Goodwill (ii) Non-controlling interest on the statement of financial position $ Non-controlling interest (iii) Retained earnings, beginning of year Retained earnings, beginning of year (iv) Profit attributable to Large's shareholders Profit attributable to Large's shareholders (v) Profit attributable to non-controlling interest Profit attributable to non-controlling interest (c) Now assume hat Large is a private entity, uses ASPE, and chooses to use e equity method to report its investment in Small. (i) Prepare Large's journal entries for each year related to its investment in Small. (Omit $ sign in your response.) tA Year 6 Debit General Journal Credit (Click to select) | (Click to select) To record the purchase of 80 of Small Company (Click to select) (Click to select) To record 80% of Small Company year 6 net income (Click to select) (Click to select) To record 80 of the dividend received from Small Company (Click to select) (Click to select) To record 80% of acquisition differential amortization and impairment of year 6 Year 7 General Journal Debit Credit (Click to select) (Click to select) To record 80% of Small Company year 7 net loss (Click to select) (Click to select) To record 803 of the dividend received from Smalil Company (Click to select) (Click to select) To record 80 of acquisition differential amortization and impairment of year 7 Year 8 Debit General Journal Credit (Click to select) (Click to select) To record 80% of Small Company year 8 net income (Click to select) (Click to select) To record 80% of the dividend received from Small Company (Click to select) (Click to select) 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 A Large Ltd. purchased 80% of Small Company on January 1, Year 6, for $760,000, when the statement of financial position for Small showed common shares of $550,000 and retained earnings of $250,000. On that date, the inventory of Small was undervalued by $70,000, and a patent with an estimated remaining life of five years was overvalued by $88,000. Small reported the following subsequent to January 1, Year 6: Profit Dividends (Loss) $140,000 (50,000) 105,000 $40,000 Year 6 25,000 55,000 Year 7 Year 8 A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,800 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 $650,000 350,000 Profit Dividends (55,000) $945,000 Retained earnings, end Required: (a) Prepare the cost method journal entries of Large for each year. (Omit $sign in your response.) Year 6 General Journal Debit Credit (Click to select) (Click to select) To record the purchase of 80s of Small Company (Click to select) (Click to select) To record dividend received from Small Company Year 7 Debit General Journal Credit (Click to select) (Click to select) To record dividend received from Small Company Year 8 Credit General Journal Debit (Click to select) (Click to select) To record dividend received from Small Company (b) Compute the following on the consolidated financial statements for the year ended December 31, Year 8: (Omit $ sign in your response.) (i) Goodwill Goodwill (ii) Non-controlling interest on the statement of financial position $ Non-controlling interest (iii) Retained earnings, beginning of year Retained earnings, beginning of year (iv) Profit attributable to Large's shareholders Profit attributable to Large's shareholders (v) Profit attributable to non-controlling interest Profit attributable to non-controlling interest (c) Now assume hat Large is a private entity, uses ASPE, and chooses to use e equity method to report its investment in Small. (i) Prepare Large's journal entries for each year related to its investment in Small. (Omit $ sign in your response.) tA Year 6 Debit General Journal Credit (Click to select) | (Click to select) To record the purchase of 80 of Small Company (Click to select) (Click to select) To record 80% of Small Company year 6 net income (Click to select) (Click to select) To record 80 of the dividend received from Small Company (Click to select) (Click to select) To record 80% of acquisition differential amortization and impairment of year 6 Year 7 General Journal Debit Credit (Click to select) (Click to select) To record 80% of Small Company year 7 net loss (Click to select) (Click to select) To record 803 of the dividend received from Smalil Company (Click to select) (Click to select) To record 80 of acquisition differential amortization and impairment of year 7 Year 8 Debit General Journal Credit (Click to select) (Click to select) To record 80% of Small Company year 8 net income (Click to select) (Click to select) To record 80% of the dividend received from Small Company (Click to select) (Click to select) 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 A