Question
Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2017. Annual amortization of $22,000 resulted from this transaction. On
Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2017. Annual amortization of $22,000 resulted from this transaction. On the date of the acquisition, Fesler reported retained earnings of $520,000 while Pickett reported a $240,000 balance for retained earnings. Fesler reported net income of $100,000 in 2017 and $68,000 in 2018, and paid dividends of $25,000 in dividends each year. Pickett reported net income of $24,000 in 2017 and $36,000 in 2018, and paid dividends of $10,000 in dividends each year.
A. If the parent's net income reflected use of the equity method, what were the consolidated retained earnings on December 31, 2018?
B. If the parent's net income reflected use of the partial equity method, what were the consolidated retained earnings on December 31, 2018?
C. If the parent's net income reflected use of the initial value method, what were the consolidated retained earnings on December 31, 2018?
Please provide the solution and answers
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