$(402,000) 301,500 Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends declared Common stock Current assets Investment in Clay Equipment Liabilities $ (406,000 294,350 Not given Not given @ (350,000) 759,000 Not given 611,700 (202,900) (433,600) 8,880 (150,000) 315,300 480,300 (126,300) a. What are the December 31, 2021, Investment Income and Investment in Clay account balances assuming Adams uses the: Equity method. Initial value method. b. What is the amount of Consolidated Expenses in its December 31, 2021, consolidated income statement under each of the following methods? c. What is the amount of Consolidated Equipment in its December 31, 2021, consolidated balance sheet under each of the following methods? d. What is Adams's January 1, 2021, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the: Equity value method. Initial value method. e. What worksheet adjustment to Adams's January 1, 2021. Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method? f. Prepare the worksheet entry to eliminate Clay's stockholders' equity. g. What is consolidated net income for 2021? Complete this question by entering your answers in the tabs below. Req A Reg B to D Req E and F Req G 71 1071 Inuoctment Income and Investment in Clay acce Adams, Inc., acquires Clay Corporation on January 1, 2020. in exchange for $579,900 cash. Immediately after the acquisition, the two companies have the following account balances. Clay's equipment (with a five-year remaining life) is actually worth $481,200. Credit balances are indicated by parentheses. warded d Current assets Investment in Clay Equipment Liabilities Common stock Retained earnings, 1/1/20 Adams Clay $ 436,000 5 252,000 579,900 724,280 426,000 (253, 000) (165,000) (350,880) (150,000) (1,137,100) (363,000) In 2020. Clay earns a net income $75,600 and declares and pays a $5,000 cash dividend. In 2020, Adams reports niet income from its own operations (exclusive of any income from Clay) of $158,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends declared Common stock Current assets Investment in Clay Equipment Liabilities Adams Clay $ (486,000) $ (402,000) 294,350 301,500 Not given Not given (433,600) 8,000 (350,000) (150,000) 759,000 315,380 Not given @ 611,700 480, 300 (202,900) (126, 380) a. What are the December 31, 2021, Investment Income and Investment in Clay account balances assuming Adams uses the: Equity method. Initial value method. b. What is the amount of Consolidated Expenses in its December 31, 2021. consolidated income statement under each of the following methods? 4 Prev 1 of 1 Next >
