Q1: South Company purchased North Company. South Company paid $550,000 cash and assumed all of North Company's liabilities. On the date of purchase, North's books showed tangible assets of $500,000, liabilities of $20,000,and equity of $480,000. An appraiser assessed the fair market value of the tangible assets at $530,000 on the acquisition date. Which of the following statements models shows how this event will affect South Company's financial statements? Balance sheet Assets Income Statement Cash Flows Statement (55e,000) FA Cash T.AssetsGoodwill Liab. EquityRev. Exp.Net Inc. NA NA 20,eeel-1 NA | =| 20,000 | (55e,eee) 1A NA NA D. (550,000)+530,00040,000 20,NA (55e,ee0) IA (550,ee0) IA NA NA- NA NANA- NA Q2:On January 1, Year 1, Gemstone Mining Company (GMC) pald $10,500,000 cash to purchase the rights to extract raw stone from a surface pit estimated to hold 50,000 pounds of useable material. GMC extracted 10,000 pounds of stone in Year 1, 20,000 pounds of stone in Year 2, and 25,000 pounds of stone in Year 3. The rights to the surface pit were expected to have a $500,000 salvage value at the end of Year 3. Which of the following statements models shows how recognizing depletion expense will affect GMC's Year 1 financial statements? Balance sheet Assets Income Statement Cash Flow Statement NA Stone Cash ReservesLiab.Equity Rev A. NA (2,000,eee)NA(2,000,000)NA NA Net Inc. 0,0e(2,880, e88) 1-2.eee,eee! | (2,eee , eee) | NA NA (2,eee , eee) oA = NA NA NA | +|( 2, eee, eee)|= | NA |+ |(2,eee,eee ) | NA NA (2,e00,e0e) OA