Foxx Corporation acquired all of Greenburg Companys outstanding stock on January 1, 2016, for $693,000 cash. Greenburgs accounting records showed net assets on that date of $558,000, although equipment with a 10-year life was undervalued on the records by $71,500. Any recognized goodwill is considered to have an indefinite life.

Greenburg reports net income in 2016 of $97,000 and $135,500 in 2017. The subsidiary declared dividends of $20,000 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	$	(860,000	)		$	(776,000	)
Cost of goods sold		107,500				194,000
Depreciation expense		348,000				375,000
Investment income		(20,000	)			0
Net income	$	(424,500	)		$	(207,000	)
Retained earnings, 1/1/18	$	(1,218,000	)		$	(335,000	)
Net income		(424,500	)			(207,000	)
Dividends declared		120,000				20,000
Retained earnings, 12/31/18	$	(1,522,500	)		$	(522,000	)
Current assets	$	325,000			$	161,000
Investment in subsidiary		693,000				0
Equipment (net)		1,054,000				634,000
Buildings (net)		826,000				588,000
Land		666,000				145,000
Total assets	$	3,564,000			$	1,528,000
Liabilities

A.

	conolidated balances
depreciation expense	$
dividends declared	$
revenues	$
equipment	$
buildings	$
goodwill	$
common stock	$

B.

How does the parent's choice of an accounting method for its investment affect the balances computed in requirment (a)?

	yes, affects consolidated totals
	no, doesn't affect consolidated totals but only internal reporting of parents
	no, neither affects consolidated totals nor internal reporting of parent

C.

Which method of accounting for this subsidiary is the parent actually using for interna reporting purposes?

	initial value method
	partial equity method
	equity method

D & E

	D. investment income	E. retained earnings
initial value methos	-------
partial equity method
equity method