CASE 3: (12.5 Marks) Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2016, for $600,000 cash. Greenburg's accounting records showed net assets on that date of S4 70,000, although equipment with a 10-year life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life Greenburg reports net income in 2016 of 890,000 and $100,000 in 2017. The subsidiary declared dividends of S20,000 in each of these two years. Account balances for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses Foxx Greenburg Revenues S (800.000) S (600,000) Cost of goods sold 100,000 150,000 Depreciation expense 300,000 350,000 Investment income (20.000 Net income S (420.000) S (100,000) Retained earnings. 1/1/18 $(1.100,000 ) S (320,000 Net income (420,000) (100.000) Dividends declared 120.000 2000 Retained earnings, 12/31/18$(1.400,000 ) S (400,000) Current assets $ 300.000 S 100,000 Investment in subsidiary 600,000 0 Equipment (net) 900.000 600.000 Buildings (net) 800,000 400,000 Land 600.000 100.00 Total assets 3.200,000 $ 1.200.000 Liabilities S (900,000) S (500,000 Common stock (900.000) (300,000 Retained earnings 1.400.000 400.000 Total liabilities and equity S3.200.000 (1.200.000 1. Determine the December 31, 2018, consolidated balance for each of the following accounts: 16 and1/2 Marks Depreciation Expense Dividends Declared Revenues Equipment Buildings Goodwill Common Stock 5 2. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)2 1/2 Marl] 3 Which method of accounting for this subsidiary is the parent actually using for internalreporting purposes? 1/2 Mark] Determine parent's investment income for 2018 under partial equity method and equity method: Mark 5. What would be Foxx's balance for retained eamings as of January 1, 2018. if cichofthe reichon following methods had been in usc? Marks initial value method Partial equity method Equity method, CASE 3: (12.5 Marks) Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2016, for $600,000 cash. Greenburg's accounting records showed net assets on that date of S4 70,000, although equipment with a 10-year life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life Greenburg reports net income in 2016 of 890,000 and $100,000 in 2017. The subsidiary declared dividends of S20,000 in each of these two years. Account balances for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses Foxx Greenburg Revenues S (800.000) S (600,000) Cost of goods sold 100,000 150,000 Depreciation expense 300,000 350,000 Investment income (20.000 Net income S (420.000) S (100,000) Retained earnings. 1/1/18 $(1.100,000 ) S (320,000 Net income (420,000) (100.000) Dividends declared 120.000 2000 Retained earnings, 12/31/18$(1.400,000 ) S (400,000) Current assets $ 300.000 S 100,000 Investment in subsidiary 600,000 0 Equipment (net) 900.000 600.000 Buildings (net) 800,000 400,000 Land 600.000 100.00 Total assets 3.200,000 $ 1.200.000 Liabilities S (900,000) S (500,000 Common stock (900.000) (300,000 Retained earnings 1.400.000 400.000 Total liabilities and equity S3.200.000 (1.200.000 1. Determine the December 31, 2018, consolidated balance for each of the following accounts: 16 and1/2 Marks Depreciation Expense Dividends Declared Revenues Equipment Buildings Goodwill Common Stock 5 2. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)2 1/2 Marl] 3 Which method of accounting for this subsidiary is the parent actually using for internalreporting purposes? 1/2 Mark] Determine parent's investment income for 2018 under partial equity method and equity method: Mark 5. What would be Foxx's balance for retained eamings as of January 1, 2018. if cichofthe reichon following methods had been in usc? Marks initial value method Partial equity method Equity method