On July 1, Year 5, Big purchased 80% of the outstanding common shares of Little for $122,080. On that date, Little's equipment had a fair value that was $21,600 less than carrying amount. The equipment had accumulated depreciation of $20,000 and an estimated remaining useful life of 8 years. Also, at the date of acquisition, Little had an exclusive contract with the provincial government to perform periodic environmental audits of selected mining companies for the next five years. An independent business valuator indicated that a third party might pay up to $50,000 to take over this contract. All other assets and liabilities had carrying amounts equal to fair values. On June 30, Year 6, goodwill had a recoverable amount of $20,000.
On June 30, Year 6, the following financial statements were prepared. Big uses the cost method to account for its investment.

Required:
(a) Prepare a schedule to calculate and allocate the acquisition differential. Explain the rationale for the accounting treatment of the $50,000 attributed to the government contract.
(b) Prepare the consolidated financial statements of Big as at June 30, Year 6.
(c) Prepare a schedule showing the changes in non-controlling interest during the year.

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INCOME STATEMENTS Big Little $162,000 $ 270,000 10,800 280,800 140,100 31,080 171,180 $ 109,620 Sales Investment income 162,000 94,380 28,200 122,580 $ 39,420 Cost of sales Expenses (misc.) Net income RETAINED EARNINGS STATEMENTS $459,000 109,620 568,620 32,400 536,220 $ 32,400 39,420 71,820 13,500 $58,320 Balance, July 1 Net income Dividends Balance, June 30 BALANCE SHEETS-June 30, Year 6 Miscellaneous assets Equipment Accumulated depreciation Investment in Little $ 835,940 162,000 (60,000) 122,080 $1,060,020 $128,820 95,600 (50,000) $174,420 Liabilities Common shares Retained earnings $253,800 270,000 536,220 $1,060,020 $ 62,100 54,000 58,320 $174,420