On January 1, Year 1, Big Corporation acquired 40% interest in Small Company for $300,000. At the date of acquisition, Small Company's equity (net assets) had a book value of $550,000 and a fair value of $600,000. The difference between the book value and the fair value relates to equipment being depreciated over the remaining useful life of 10 years. During Year 1, Small Company had net income of $900,000 and paid a $40,000 dividend.

Required:

1. Prepare the journal entries required in year 1 to account for the investment in Small Company.

2. Compute the asset fair value difference and goodwill

3. Record the journal entry to depreciate the fair value difference

4. Determine the investment-related amounts to be reported at year-end on Big Corporation's balance sheet