50.1K

Verified Solution

Link Copied!

Giant acquired all of Small's common stock on January 1, 2011. Over the next few years, Giant applied the equity method to the recording of this investment. At the date of the original acquisition, $110,000 of the fair- value price was attributed to undervalued land while $98,000 was assigned to equipment having a 10-year fe. The remaining $64,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill Following are individual financial statements for the year ending December 31, 2015. On that date, Small owes Giant $12,800. Small declared and paid dividends in the same period. Credits are indicated by parentheses Giant Sma $(1,298,800) (460,000) Revenues Cost of goods sold 610,000 115,000 203,000 Depreciation expense 190,000 Equity in income of Small (132,200) Net income (631,000) (142,000) $(1,200,000) (688,000) Retained earnings, 1/1/15 Net income (above) (631,000) (142,000) Dividends declared 290,000 120,000 $(1,541,000) (710,000) Retained earnings, 12/31/15 Current assets 108,500 216,000 1,103,500 Investment in Small 231,000 Land 490,000 Buildings (net) 396,000 435,000 Equipment (net) 580,000 384,000 Goodwill 2,678,000 1,266,000 Total assets (887,000) (386,000) Liabilities Common stock (250,000) (170,000) Retained earnings(above) (1,541,000) (710,000) Total liabilities and equities $(2,678,000) $(1,266,000)

Answer & Explanation Solved by verified expert

See Answer