Good Morning. Below is the chapter assignment I am working on. I don't need all of it answered. I am just searching for the process as to how to find number 10. The retained earnings of Pecos company 01/01/2018 for consolidated, Full and partial equity, and iniitial value. I know what the answer is but I want to know how to get the answers on my own.

You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent companys trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss.

The project requires preparation of the following four separate worksheets:

Consolidated information worksheet (follows).

Equity method consolidation worksheet.

Initial value method consolidation worksheet.

Partial equity method consolidation worksheet.

If your spreadsheet package has multiple worksheet capabilities (e.g., Excel), you can use separate worksheets; otherwise, each of the four worksheets can reside in a separate area of a single spreadsheet.

In formulating your solution, each worksheet should link directly to the first worksheet. Also, feel free to create supplemental schedules to enhance the capabilities of your worksheet.

Project Scenario

Pecos Company acquired 100 percent of Suaros outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:

Assets		Liabilities and Equity
Cash	$ 37,000	Liabilities	$(422,000)
Receivables	82,000
Inventory	149,000	Common stock	(350,000)
Land	90,000	Retained earnings	(126,000)
Equipment (net)	225,000
Software	?315,000		????
??Total assets	$898,000	??Total liabilities and equity	$(898,000)

At the acquisition date, the fair values of each identifiable asset and liability that differed from book value were as follows:

Land	$ 80,000
Brand name	60,000	(indefinite lifeunrecognized on Suaros books)
Software	415,000	(2-year estimated remaining useful life)
In-process R&D	300,000

Additional Information

Although at acquisition date Pecos expected future benefits from Suaros in-process research and development (R&D), by the end of 2017 it became clear that the research project was a failure with no future economic benefits.

During 2017, Suaro earns $75,000 and pays no dividends.

Selected amounts from Pecos and Suaros separate financial statements at December 31, 2018, are presented in the consolidated information worksheet. All consolidated worksheets are to be prepared as of December 31, 2018, two years subsequent to acquisition.

Pecoss January 1, 2018, Retained Earnings balancebefore any effect from Suaros 2017 incomeis $(930,000) (credit balance).

Pecos has 500,000 common shares outstanding for EPS calculations and reported $2,943,100 for consolidated assets at the beginning of the period.

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Following is the consolidated information worksheet.

	A	B	C	D
?1	December 31, 2018, trial balances
?2
?3		Pecos	Suaro
?4	Revenues	$ (1,052,000)	$ (427,000)
?5	Operating expenses	821,000	262,000
?6	Goodwill impairment loss	?
?7	Income of Suaro	? ??? ?
?8	Net income	?	$ (165,000)
?9
10	Retained earningsPecos 1/1/18	?
11	Retained earningsSuaro 1/1/18		(201,000)
12	Net income (above)	?	(165,000)
13	Dividends declared	200,000	35,000
14	Retained earnings 12/31/18	? ? ?? ?	$ (331,000)
15
16	Cash	195,000	95,000
17	Receivables	247,000	143,000
18	Inventory	415,000	197,000
19	Investment in Suaro	?
20
21
22
23	Land	341,000	85,000
24	Equipment (net)	240,100	100,000
25	Software		312,000
26	Other intangibles	145,000
27	Goodwill
28	Total assets	? ? ?? ?	$ 932,000
29
30	Liabilities	(1,537,100)	(251,000)
31	Common stock	(500,000)	(350,000)
32	Retained earnings (above)	?????	(331,000)
33	Total liabilities and equity	? ??? ?	$ (932,000)
34
35	Fair-value allocation schedule
36	Price paid	1,450,000
37	Book value	?476,000
38	Excess initial value	? 974,000	Amortizations
39	to land	? (10,000)	2017	2018
40	to brand name	?60,000	?????	?
41	to software	? 100,000	?????	?
42	to IPR&D	? 300,000	?	?
43	to goodwill	? 524,000	?	?
44
45	Suaros RE changes	Income	Dividends
46	2017	? 75,000	0
47	2018	?165,000	35,000

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Project Requirements

Complete the four worksheets as follows:

Input the consolidated information worksheet provided and complete the fair-value allocation schedule by computing the excess amortizations for 2017 and 2018.

Using separate worksheets, prepare Pecoss trial balances for each of the indicated accounting methods (equity, initial value, and partial equity). Use only formulas for the Investment in Suaro, the Income of Suaro, and Retained Earnings accounts.

Using references to other cells only (either from the consolidated information worksheet or from the separate method sheets), prepare for each of the three consolidation worksheets:

Adjustments and eliminations.

Consolidated balances.

Calculate and present the effects of a 2018 total goodwill impairment loss on the following ratios for the consolidated entity:

Earnings per share (EPS).

Return on assets.

Return on equity.

Debt to equity.

Your worksheets should have the capability to adjust immediately for the possibility that all acquisition goodwill can be considered impaired in 2018.

Prepare a word-processed report that describes and discusses the following worksheet results:

The effects of alternative investment accounting methods on the parents trial balances and the final consolidation figures.

The relation between consolidated retained earnings and the parents retained earnings under each of the three (equity, initial value, partial equity) investment accounting methods.

The effect on EPS, return on assets, return on equity, and debt-to-equity ratios of the recognition that all acquisition-related goodwill is considered impaired in 2018.