(XYZ) Co. purchased 75% of (ABC) Co. Company on January 1, Year 6, for $630,000, when the statement of financial position for (ABC) Co. showed common shares of $480,000 and retained earnings of $180,000. On that date, the inventory of (ABC) Co. was undervalued by $50,000, and a patent with an estimated remaining life of five years was overvalued by $74,000.

(ABC) Co. reported the following subsequent to January 1, Year 6:

	Profit (Loss)			Dividends
Year 6	$	112,000		$	33,000
Year 7		(43,000	)		18,000
Year 8		98,000			48,000

A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,100 should be reported for Year 8 on the consolidated income statement. (XYZ) Co uses the cost method to account for its investment in (ABC) Co. and reported the following for Year 8 for its separate-entity statement of changes in equity:

Retained earnings, beginning	$	580,000
Profit		280,000
Dividends		(62,000	)
Retained earnings, end	$	798,000

Required:

1. Prepare the cost method journal entries of (XYZ) Co. for each year.

2. Compute the following on the consolidated balances for the year ended December 31, Year 8:

1. Goodwill
2. Non-controlling interest on the statement of financial position
3. Retained earnings, beginning of year
4. Profit attributable to (XYZ) Co.s shareholders
5. Profit attributable to non-controlling interest

3. Now assume that (XYZ) Co. is a private entity, uses ASPE, and chooses to use the equity method to report its investment in (ABC) Co. Determine the investment in (ABC) Co. at December 31, Year 8.