Adams, Inc., acquires Clay Corporation on January 1, 2017, in exchange for $732,300 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 $604,900. Credit balances are indicated by parentheses.

Adams Clay

Current assets $326,000 $290,000

Investment in Clay 732,300 0

Equipment 781,900 526,000

Liabilities (280,000) (170,000)

Common stock (350,000) (150,000)

Retained earnings, 1/1/17(1,210,200) (496,000)

In 2017, Clay earns a net income of $62,700 and declaresand pays a $5,000 cash dividend. In 2017, Adams reports netincome from its own operations (exclusive of any income from Clay) of $193,000 and declares no dividends. At the end of 2018, selected account balances for the two companies are as follows:

Adams Clay

Revenues $(452,000) $(272,000)

Expenses 327,700 204,000

Investment income Not given 0

Retained earnings, 1/1/18 Not given (553,700)

Dividends declared 0 8,000

Common stock (350,000) (150,000)

Current assets 651,000 342,800

Investment in Clay Not given 0

Equipment 701,900 574,900

Liabilities (208,900) (130,700)

What are the December 31, 2018, Investment Income and Investment in Clay account balances assuming Adams uses the:

• Equity method.
• Initial value method.

How does the parent's internal investment accounting method choice affect the amount reported for expenses in its December 31, 2018, consolidated income statement?

How does the parent's internal investment accounting method choice affect the amount reported for equipment in its December 31, 2018, consolidated balance sheet?

What is Adams's January 1, 2018, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the:

• Equity value method.
• Initial value method.

What worksheet adjustment to Adams's January 1, 2018, Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method?

Prepare the worksheet entry to eliminate Clay's stockholders' equity.

What is consolidated net income for 2018?