Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2016, for $646,000 cash. Greenburg's accounting records showed net assets on that date of $497,000, although equipment with a 10-year life was undervalued on the records by $66,000. Any recognized goodwill is considered to have an indefinite life.

Greenburg reports net income in 2016 of $119,000 and $100,500 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.

FoxxGreenburgRevenues$(868,000)$(652,000)Cost of goods sold108,500163,000Depreciation expense370,000406,000Investment income(20,000)0Net income$(409,500)$(83,000)Retained earnings, 1/1/18$(1,246,000)$(408,000)Net income(409,500)(83,000)Dividends declared120,00020,000Retained earnings, 12/31/18$(1,535,500)$(471,000)Current assets$305,000$118,000Investment in subsidiary646,0000Equipment (net)1,088,000700,000Buildings (net)968,000526,000Land674,000122,000Total assets$3,681,000$1,466,000Liabilities$(1,245,500)$(695,000)Common stock(900,000)(300,000)Retained earnings(1,535,500)(471,000)Total liabilities and equity$(3,681,000)$(1,466,000)

1. Determine the December 31, 2018, consolidated balance for each of the following accounts:

Depreciation ExpenseBuildingsDividends DeclaredGoodwillRevenuesCommon StockEquipment

1. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)?
2. Which method of accounting for this subsidiary is the parent actually using for internal reporting purposes?
3. Determine parent's investment income for 2018 under partial equity method and equity method.
4. What would be Foxx's balance for retained earnings as of January 1, 2018, if each of the following methods had been in use?

• Initial value method.
• Partial equity method.
• Equity method.