Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE HIGHLIGHT THE FINAL ANSWERS. THANX Adams, Inc., acquires Clay Corporation on January 1, 2020, In exchange for $527,000 cash. Immediately after the acquisition, the

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

PLEASE HIGHLIGHT THE FINAL ANSWERS. THANX

Adams, Inc., acquires Clay Corporation on January 1, 2020, In exchange for $527,000 cash. Immediately after the acquisition, the two companies have the following account balances. Clay's equipment (with a five-year remaining life) is actually worth $448,800. Credit balances are indicated by parentheses. Clay $ 267, eee Current assets Investment in Clay Equipment Liabilities Common stock Retained earnings, 1/1/20 Adams $ 394,000 527,000 630, 80e (286,000) (350, eee) (915, 800) 396, see (199, eee) (150,000) (314,00) In 2020, Clay earns a net income of $54,300 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net Income from its own operations (exclusive of any income from Clay) of $172,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams (460,000) 333,500 Not given Not given Clay $ (270,000) 202,5ee Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends declared Common stock Current assets Investment in Clay Equipment Liabilities (363,300) 8,000 (150,000) 335,700 (350, eee) 695, eee Not given 511,300 (226,900) 453,900 (162,700) a. What are the December 31, 2021, Investment Income and Investment in Clay account balances assuming Adams uses the: Equity method. Initial value method. Initial value menoa. b. What is the amount of Consolidated Expenses In Its December 31, 2021, consolidated Income statement under each of the following methods? c. What is the amount of Consolidated Equipment in its December 31, 2021, consolidated balance sheet under each of the following methods? d. What is Adams's January 1, 2021, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the: Equity value method. Initial value method. e. What worksheet adjustment to Adams's January 1, 2021, Retained Earnings account balance is required if Adams accounts for its Investment in Clay using the initial value method? f. Prepare the worksheet entry to eliminate Clay's stockholders' equity. g. What is consolidated net Income for 2021? Complete this question by entering your answers in the tabs below. Req A Req B to D Reg E and F ReqG What are the December 31, 2021, Investment Income and Investment in Clay account balances assuming Adams uses the: Investment Income Investment in Clay Equity method Initial value method Req A Reg B to D Reg E and F Reg G b. What is the amount of Consolidated Expenses in its December 31, 2021, consolidated income statement under each of the following methods? c. What is the amount of Consolidated Equipment in its December 31, 2021, consolidated balance sheet under each of the following methods? d. What is Adams's January 1, 2021, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the: Equity value method. Initial value method. Show less b. Consolidated Expense c. Consolidated Equipment d. Retained Earnings Equity method Initial value method Partial equity method e. What worksheet adjustment to Adams's January 1, 2021, Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method? f. Prepare the worksheet entry to eliminate Clay's stockholders' equity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less view transaction list Consolidation Worksheet Entries

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

Corporate Fraud Prevention And Detection

Authors: Joseph T. Wells

5th Edition

1119351987, 9781119351986

More Books

Students also viewed these Accounting questions