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Adams, lnc., acquires Clay Corporation on January 1, 2020, in exchange for $527,000 cash. Immediately after the acpuisition, the two companies have the following account
Adams, lnc., acquires Clay Corporation on January 1, 2020, in exchange for $527,000 cash. Immediately after the acpuisition, the two companies have the following account bolances. Cay's equipment (with a five-year remaining life) is actually worth $448,800. Credit balaness are indicated by parentheses. In 2020, Clay earns a net income of \$54,300 and declares and pays a \$5,000 cash dividend. In 2020, Adams reports net income from its awn operations (cxclushe of any income from Clay) of $172,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: a. What are the December 31, 2021, Inwestment Income and Investment in Clay account balances assuming Adams uses the: - Equity method. - Intial value method. b. What is the amount of Consolidated Expenses in its December 31, 2021, consoldated 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, fetained Eamings account balance assuming Adams accounts for its investment in Clay using the: - Equity value methad. - Intial value method. e. What worksheet adjustment to Adams's January 1, 2021, Fetained Earnings account balance is required if Adams accounts for its irvestment in Clay using the initial value method? t. Prepare the worksheet entry to elminate Clay's stockholders' equity. g. What is consolidated net income for 2021 ? Complete this question by entering your answers in the tabs below
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