Question 2. (10 marks) On January 1, Year 2 Public purchased 30% of the outstanding voting shares of Silent Inc. for $250,000. Silent's Balance Sheet on that date is shown below: Cash Accounts Receivable Inventory Equipment Total Assets 300,000 75,000 25,000 250.000 $650,000 Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity 200,000 250,000 200,000 $650,000 Silent's carrying values equaled their fair market values on the acquisition date, with the exception of the equipment, which had a fair market value of $290,000 and the inventory, which had a fair market value of $20,000. The equipment had a remaining useful life of five years from the acquisition date. The equipment is being amortized on a straight-line basis. Silent reported Net Incomes of $60,000 and $50,000 for Year 2 and Year 3 respectively. Silent also paid dividends of $25,000 and $30,000 for Year 2 and Year 3 respectively. In Year 3 there was a goodwill impairment loss equal to 10% of the goodwill created at acquisition date. Required: a) Prepare the journal entries for Year 2 and Year 3. (8 marks) b) Prepare the journal entry, if necessary, if the recoverable amount of 40% of investment in Maple was $210,000 at January 10, Year 4 and the drop was considered a permanent decline. If no journal entry is required, briefly explain why. (2 marks) Question 2. (10 marks) On January 1, Year 2 Public purchased 30% of the outstanding voting shares of Silent Inc. for $250,000. Silent's Balance Sheet on that date is shown below: Cash Accounts Receivable Inventory Equipment Total Assets 300,000 75,000 25,000 250.000 $650,000 Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity 200,000 250,000 200,000 $650,000 Silent's carrying values equaled their fair market values on the acquisition date, with the exception of the equipment, which had a fair market value of $290,000 and the inventory, which had a fair market value of $20,000. The equipment had a remaining useful life of five years from the acquisition date. The equipment is being amortized on a straight-line basis. Silent reported Net Incomes of $60,000 and $50,000 for Year 2 and Year 3 respectively. Silent also paid dividends of $25,000 and $30,000 for Year 2 and Year 3 respectively. In Year 3 there was a goodwill impairment loss equal to 10% of the goodwill created at acquisition date. Required: a) Prepare the journal entries for Year 2 and Year 3. (8 marks) b) Prepare the journal entry, if necessary, if the recoverable amount of 40% of investment in Maple was $210,000 at January 10, Year 4 and the drop was considered a permanent decline. If no journal entry is required, briefly explain why. (2 marks)