Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $631,400 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 $495,600. Credit balances are indicated by parentheses. Adams clay Current assets 408,000 $ 283,000 Investment in Clay 631,400 0 Equipment 685,600 438,000 Liabilities (278,000) (167,000) Common stock (350,000) (150,000) Retained earnings, 1/1/20 (1,097,000) (404,000) In 2020, Clay earns a net income of $69,600 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $196,000 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 $ (542,000) 392,950 Not given Not given 0 (350,000) 778,000 Not given 599,600 (203,600) Clay $ (424,000) 318,000 0 (468,600) 8,000 (150,000) 334,900 0 480,900 (110,600) 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. Reg A Reg B to D Reg E and F Req G Complete this question by entering your answers in the tabs below. Req A Req B to D Reg E and F Req G Vhat are the December 31, 2021, Investment Income and Investment in Clay account balances assuming AC Investment Income Investment in Clay quity method itial value method Req B to D > Complete this question by entering your answers in the tabs below. Req A Reg B to D Reg E and F Req G 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. Show less b. Consolidated Expense c. Consolidated Equipment d. Retained Earnings Equity method Initial value method Partial equity method Save & Exit Submit Reg A Req B to D Req E and F Req G e. What worksheet adjustment to Adams's January 1, 2021, Retained Earnings account balance is required If Adams accounts for Investment in Clay using the initial value method? f. Prepare the worksheet entry to eliminate Clay's stockholders' equity. (If no entry is required for a transaction/event, select "No entry required" in the first account field.) Show view transaction list Consolidation Worksheet Entries Record the adjustment to retained earnings if Adams accounts for its investment in Clay under the initial value method. Note: Enter debits before credits. Debit Credit Date Accounts January 01, 2021 What worksheet adjustment to Adams's January 1, 2021, Retained Earnings account balance is required if 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 Req B to D Reg E and F Req G What is consolidated net income for 2021? Consolidated net income
