On 1/1/2014 Big and Small had the following balance sheets: Big Small Cash 2,000,000 $500,000 Inventory $1,000,000 $300,000 Land $1,000,000 $500,000 Equipment $2,000,000 $800,000 a/d equip $400,000 $300,000 total assets $5,600,000 $1,800,000 a/p $1,000,000 $900,000 c/s $3,000,000 $800,000 r/e $1,600,000 $100,000 On 1/2/14 Big purchased all of the stock of Small for $1,100,000. On this date, Smalls land had a fair market value of $700,000 and Smalls equipment had a fair market value of $100,000. Required: a) make the journal entry Big makes when it buys the stock of Small from Smalls stockholders. b) make the journal entry Small makes when Big buys the stock of Small from Smalls stockholders c) Make the worksheet entry needed 1/2/2014 for the consolidated balance sheet d) show the 1/2/14 consolidated balance sheet of Big. Part 2: (a continuation of part 1) In 2014 Big and Small reported the following income statements Big Small Sales 1,000,000 300,000 Cogs 500,000 100,000 Gross profit 500,000 200,000 Depreciation 160000 50000 Investment income A 0 Net income B 150,000 Note: the depreciation for both companies is attributable to the equipment which has a 10 year remaining life, and is being depreciated using straight line depreciation with no salvage. The 12/31/14 balance sheets of Big and Small are as follows: Big Small Cash 1,100,000 $650,000 Inventory $1,000,000 $300,000 Land $1,000,000 $500,000 Equipment $2,000,000 $800,000 a/d equip $560,000 $350,000 invest in Sm C 0 total assets D $1,900,000 a/p $1,000,000 $900,000 c/s $3,000,000 $800,000 r/e E $200,000 Required: a) prepare the journal entries unconsolidated Big made in 2014 due to its investment in Small. Let me know which method you are using for the investment (equity, partial equity or initial value) b) determine the values for: A) B) C) D) E) c) make the necessary work sheet entries needed for the consolidation d) prepare the consolidated income statement for 2014 e) prepare the consolidated balance sheet on 12/31/14 HINT: DONT FORGET ABOUT DIVIDENDS