1. Southeast Airlines pays $25,000 million for all of the stock of Dakota Airlines on July 1, 2016. Dakota's book value at the date of acquisition is $5,600 million. The following items are reported on Dakota's books at amounts that are different from their fair values:
(in millions) Fair Value- Book Value Reporting Method
Inventories $400 FIFO
Property, plant, & equipment $(3,000) 10-year life, SL
In-process R&D $4,000 Indefinite life
It is now June 30, 2017, the fiscal year-end for both Southeast and Dakota. Dakota reported net income of $2,500 million and declared and paid dividends of $400 million in fiscal 2017. Southeast uses the complete equity method to report its investment on its own books. An impairment test at June 30, 2017 reveals that 10% of the goodwill arising from this aquisition is impaired.
a. Calculate equity in net income of Dakota Airlines for fiscal 2017, reported by Southeast on its own books.
b. What is the June 30, 2017 balance for Investment in Dakota Airlines, reported by Southeast on its own books? I need help with this problem as soon as possible, and I need it by Thursday night.