Topic: Analyzing and Interpreting Equity Method (2 points) 8. In 2013, West Yellow Corporation made a $1.44 million investment in Ennis, Inc. and assumed a 42% ownership of Ennis. The investment in Ennis is accounted for under the equity method. Ennis reported the following financial information for the year ended December 31, 2017 (in thousands): Year ended December 31, Revenues Gross margin Net income 2017 $845,760 $100,014 $44,298 December 31, Current assets Noncurrent assets Current liabilities Noncurrent liabilities Equity 2017 $364,806 3,630 321,846 1,308 $ 45,282 a. b. Calculate the equity earnings that West Yellow reported on its 2017 income statement. Determine the investment balance for Ennis on West Yellow's balance sheet at December 31, 2017. Topic: Goodwill Impairment (3 points) 9. On January 1, 2017, Kamiah Corp. purchases 100% of Lewiston Inc. for $11.52 million. At the time of acquisition, the fair market value of Lewiston's tangible net assets (excluding goodwill) is $9.48 million. Kamiah ascribes the excess of $2.04 million to goodwill. During the year the fair value of Lewiston declines to $9.6 million and the fair value of Lewiston's tangible net assets is estimated at $8.16 million as of December 31, 2017. a. Determine if the goodwill has become impaired and, if so, the amount of the impairment. b. What impact does the impairment of goodwill have on Kamiah Corp's financial statements? Topic: Understanding Split-Offs (2 points) 10. Sanfran, Inc. decided to split off its gift retail subsidiary named J. Wall (JW). Assume Sanfran holds 1.5 million shares of JW at a net book value $72 million and the current market value of JW shares is $57.60 per share. Assume a 1 to 1 share transaction. a. What would be the effect on the balance sheet if shares are distributed pro rata? b. What would be the effect on the balance sheet if shares are distributed non pro rata?