Retained earnings, December 31, 2012 13. On January 1, 2009, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. I Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2012 Net income (above) Dividends paid Rand Corp. Spaulding le year ended December 31, 2012. $ 372,000 Inc. $108,000 (264,000) (72,000) 25,000 0 $ 133,000 $36.000 765,000 $102,000 133,000 36,000 (84,000) (24,000) $ 814.000 $114.000 Current assets $ 150,000 $ 22,000 Investment in Spaulding Inc. 242,000 Buildings (net) Equipment (net) 525,000 85,000 389,250 129.000 Total assets $1.306.250 $236.000 Liabilities 82,250 $ 50,000 Common stock Additional paid-in capital Total liabilities and stockholders' equity 360,000 50,000 72,000 0 Retained earnings, December 31, 2012 (above) 814.000 114,000 $1.306.250 $236,000 Required: Prepare consolidation journal entries for December 31, 2012 assuming Rand uses the following methods for i investment in Spaulding: a. the equity method b. the partial equity method c. the initial value method