Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Management

Authors: Neelakantan Ramachandran, Ram Kumar Kakani

4th Edition

9385965662, 978-9385965661

More Books

Students also viewed these Accounting questions