On July $1,$ Year $$,$ Big purchased $80\%$ of the outstanding common shares of Little for $$122,080.$ On that date, Little's equipment had a fair value that was $$21,600$ less than carrying amount. The equipment had accumulated depreciation of $$20,000$ and an estimated remaining useful life of $8$ years. Also, at the date of acquisition, Little had an exclusive contract with the provincial government to perform periodic environmental audits of selected mining companies for the next five years. An independent business valuator indicated that a third party might pay up to $$50,000$ to take over this contract. All other assets and liabilities had earrying amounts equal to fair values. On June $30,$ Year $6,$ goodwill had a recoverable amount of $$20,000.$

On June $30,$ Year $6,$ the following financial statements were prepared. Big uses the cost method to account for its investment.

NCOME STATEMENTS

Big

Sales

Investment income

Cost of sales

Expenses $($misc$.)$

Net income

$ $270,000$

$\backslash$table$[[10\mathrm{.}800],[280\mathrm{.}800],[140\mathrm{.}100],[31\mathrm{.}050],[171\mathrm{.}150],[109\mathrm{.}620]]$

Link

$5162,000$

$162,000$

$96330$

$24300$

$127530$

$5\mathrm{.}30\mathrm{.}430$

RETAINED EARNINGS STATEMENTS

s $459,000$

$5.32\mathrm{.}400$