On January $1,$ Year $7,$ the Large Company purchased $56,000$ of the $80,000$ ordinary shares of the Small Company for $$75$ per share. On that date, Small had ordinary shares of $$3,200,000,$ and retained earnings of $$1,800,000.$ When acquired, Small had inventories with fair values $$50,000$ less than carrying amount, a parcel of land with a fair value $$200,000$ greater than the carrying amount, All other identifiable assets and liabilities of Small had fair values equal to their carrying amounts. Small$$s accumulated depreciation on the plant and equipment was $$440,000$ at the date of acquisition.

The year $11$ financial statements for Large and Small were as follows:

INCOME STATEMENTS

for year ending December $31,$ Year $11$

Large Small

Sales $ $12,000,000$ $ $4,500,000$

Dividends, investment income and gains $1,680,0002,400,000$

Total income $13,680,0006,900,000$

Cost of goods sold $9,000,0002,800,000$

Other expenses $600,000600,000$

Income taxes $200,000200,000$

Total expenses $9,800,0003,600,000$

Profit $ $3,880,000$ $ $3,300,000$

STATEMENTS OF FINANCIAL POSITION

December $31,$ Year $11$

Large Small

Land $ $6,200,000$ $ $2,800,000$

Plant and equipment $23,200,00014,200,000$

Accumulated depreciation $(4,400,000)(3,600,000)$

Investment in Small, cost $4,450,0000$

Inventories $6,200,0003,400,000$

Cash and current receivables $2,370,0001,480,000$

Total assets $ $38,020,000$ $ $18,280,000$

Ordinary shares $ $10,000,000$ $ $3,200,000$

Retained earnings $10,800,0005,600,000$

Long term Liability $8,200,0002,400,000$

Deferred income taxes $1,600,000100,000$

Current liabilities $7,420,0006,980,000$

Total equity and liabilities $ $38,020,000$ $ $18,280,000$

Additional Information

At the acquisition date, the equipment had an expected remaining useful life of $5$ years. Both companies use the straight$-$line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption. Assume a $30\%$ income tax rate on all applicable items. Impairment of goodwill in Year $8$ amounted to $$25,000$ and in year $11,$ amounted to $$30,000.$ Method for adjusting depreciation at acquisition is the net method.

On August $1,$ Year $11,$ Small sold a parcel of land to Large and recorded a total non$-$operating gain of $$300,000.$

Sales of finished goods from Large to Small totalled $$1,070,000$ in Year $10$ and $$2,070,000$ in Year $11.$ These sales were priced to provide a gross profit margin on selling price of $25\%$ to the Large Company. Small$$s December $31,$ Year $10,$ inventory contained $$321,000$ of these sales; December $31,$ Year $11,$ inventory contained $$621,000$ of these sales.

On January $1,$ Year $8,$ Small purchased and sold copier equipment to Large at a gain of $$100,000$

Sales of finished goods from Small to Large were $$870,000$ in Year $10$ and $$1,270,000$ in Year $11.$ These sales were priced to provide a gross profit margin on selling price of $30\%$ to the Small Company. Large$$s December $31,$ Year $10,$ inventory contained $$170,000$ of these sales; the December $31,$ Year $11,$ inventory contained $$570,000$ of these sales.

The amount still owing by Small on inventory purchases is $$120,000.$

Large$$s investment in Small$$s account is carried in accordance with the cost method and includes advances to Small of $$250,000,$ which are also included in current liabilities.

There are no intercompany amounts other than those noted, except for the dividends of $$480,000($total amount$)$ declared and paid by Small.

$($c$)$ Changes to Acquisition Differential Table. $($Negative amount should be indicated with a minus sign.$)$

Please answer in the format of the chart.