Please see the attachment. All the questions are in the attachment.

Mid-term exam Part 1 Question #1: For each of the following cases, determine: (a) The correct amount of goodwill to report, and (b) the amount of goodwill impairment to record, if any. Fair value of net identifiable assets Fair value of business unit Book value of business unit Reported goodwill Correct goodwill to report Impairment, if any Case A 490,000 480,000 450,000 50,000 Case B 400,000 490,000 500,000 80,000 Case C 520,000 600,000 650,000 50,000 Case D 410,000 400,000 405,000 20,000 Question #2 On 1/1/17 Big Co acquired 80% of Little Co. common stock for $480,000. The fair value of the NC Interest on that date was $120,000. Little's book value on that date was $500,000. Little's assets and liabilities had fair values equal to book value except: Inventory, FIFO basis, undervalued by $10,000 Land, overvalued by $10,000 Equipment, 10 year life, undervalued by $40,000 Bonds payable, 3 year remaining life, overvalued by $6,000 In 2017, Little reported earnings of $60,000 and paid dividends of $20,000. In 2018, Big determined that the correct goodwill figure for their Little acquisition should be $25,000. In 2018, Little reported earnings of $100,000 and paid dividends of $40,000. Required: 1. Prepare appropriate equity method and elimination entries for 2017 and 2018, and complete the attached consolidation worksheets. 2. Ignoring the information in the consolidation worksheets, prepare the elimination entries that would be needed if Big used the Cost method to account for their investment in Little. 2017 Big Little dr cr Consolidate d Sales 400,00 350,00 0 0 200,00 200,00 0 0 Cost of goods sold Depreciation expense 40,000 Operating 100,00 expenses 0 Interest expense 15,000 Investment income 35,200 Consolidated income 80,200 Income to NC Interest Income to Controlling interest 300,00 Beginning R/E 0 Add: Income 80,200 Less: Dividends 50,000 Ending Retained 330,20 earnings 0 Cash 40,000 Receivables 70,000 100,00 Inventory 0 499,20 Investment in Little 0 400,00 PPE, net 0 200,00 Land 0 In-process R&D Other Assets Goodwill 30,000 50,000 10,000 60,000 350,00 0 60,000 20,000 390,00 0 15,000 40,000 80,000 300,00 0 150,00 0 255,00 11,000 0 Accounts payable Bonds payable Discount on bonds Common Stock Additional paid in capital Retained earnings NC Interest 2018 Sales Cost of goods sold Depreciation expense Operating expenses Impairment loss Interest expense Investment income 40,000 50,000 400,00 250,00 0 0 250,00 0 50,000 300,00 100,00 0 0 330,20 390,00 0 0 Big Little dr 540,00 380,00 0 0 350,00 190,00 0 0 60,000 30,000 80,000 50,000 15,000 52,000 Consolidated income 87,000 Income to NC Interest Income to Controlling interest 330,20 Beginning R/E 0 Add: Income Less: Dividends Ending Retained earnings Cash Receivables Inventory Investment in Little PPE, net 87,000 50,000 367,20 0 40,000 70,000 100,00 0 519,20 0 340,00 10,000 100,00 0 390,00 0 100,00 0 40,000 450,00 0 30,000 80,000 70,000 140,00 cr Consolidate d Land In-process R&D Other Assets Goodwill Accounts payable Bonds payable Discount on bonds Common Stock Additional paid in capital Retained earnings NC Interest 0 200,00 0 0 150,00 0 48,000 355,00 0 50,000 350,00 0 25,000 200,00 0 250,00 0 300,00 0 367,20 0 0 50,000 100,00 0 450,00 0 0