Adams, Inc., acquires Clay Corporation on January 1, 2017, in exchange for $693,900 cash. Immediately after the acquisition, the two companies have the following account balances. Clays equipment (with a five-year remaining life) is actually worth $541,800. Credit balances are indicated by parentheses.

	Adams			Clay
Current assets	$	344,000		$	295,000
Investment in Clay		693,900			0
Equipment		740,800			480,000
Liabilities		(216,000	)		(163,000	)
Common stock		(350,000	)		(150,000	)
Retained earnings, 1/1/17		(1,212,700	)		(462,000	)

In 2017, Clay earns a net income of $76,800 and declares and pays a $5,000 cash dividend. In 2017, Adams reports net income from its own operations (exclusive of any income from Clay) of $182,000 and declares no dividends. At the end of 2018, selected account balances for the two companies are as follows:

	Adams			Clay
Revenues	$	(536,000	)	$	(302,000	)
Expenses		388,600			226,500
Investment income		Not given			0
Retained earnings, 1/1/18		Not given			(533,800	)
Dividends declared		0			8,000
Common stock		(350,000	)		(150,000	)
Current assets		696,000			359,500
Investment in Clay		Not given			0
Equipment		623,800			530,100
Liabilities		(143,700	)		(124,600	)

A.

	investment income	investment in clay
equity method
initial value method

B&C&D

	consolidated expense	consolidated equipment	retained earnings
equity method
initial value method
partial equity method

E&F

record retained earnings if Adams account for its investment in Clay under the initial value method

prepare entry S to eliminate stockhlders equity accounts of subsidiary

G

consolidated net income