Question & Answer: equity method to the recording of this investment. At the date of the original acquisition, $13…..

Chapter 3 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, $138,500 of the fair-value price was attributed to undervalued land while $76,000 was assigned to equipment having a 10- year life. The remaining $65,500 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 $10,600. Small declared and paid dividends in the same period. Credits are indicated by parentheses. Giant Revenues Cost of goods sold Depreciation expense Equity in income of Small S(1,230,600) (520,000) 131,000 206,000 578,000 198,000 (175,400) Net income s (630,000) (183,000) Retained earnings, 1/1/15 Net income (above) Dividends declared $(1,510,000) (657,000) (630,000) (183,000) 100,000 320,000 Retained earnings, 12/31/15$(1,820,000) S (740,000) Current assets Investment in Small Land Buildings (net) Equipment (net) Goodwill $ 255,000 258,000 1,152,000 483,000 193,000 497,000 362,000 685,000 Total assets s 2,911,000 $1,310,000 Liabilities Common stock Retained earnings(above) S (841,000) $ (400,000) (250,000) (170,000) (740,000) (1,820,000)