Foxx Corporation acquired all of Greenburg Company$$s outstanding stock on January $1,2022,$ for $$586,000$ cash. Greenburg$$s accounting records showed net assets on that date of $$440,000,$ although equipment with a $10-$year remaining life was undervalued on the records by $$56,500.$

Greenburg reports net income in $2022$ of $$105,000$ and $$137,500$ in $2023.$ The subsidiary declared dividends of $$20,000$ in each of these two years.

Account balances for the year ending December $31,2024,$ follow. Credit balances are indicated by parentheses.

Items Foxx Greenburg

Revenues $ $(1,164,000)$ $ $(620,000)$

Cost of goods sold $145,500155,000$

Depreciation expense $358,000440,000$

Investment income $(20,000)0$

Net income $ $(680,500)$ $ $(25,000)$

Retained earnings, $1/1/24$ $ $(1,160,000)$ $ $(342,500)$

Net income $(680,500)(25,000)$

Dividends declared $120,00020,000$

Retained earnings, $12/31/24$ $ $(1,720,500)$ $ $(347,500)$

Current assets $ $373,000$ $ $194,000$

Investment in subsidiary $586,0000$

Equipment $($net$)1,082,000676,000$

Buildings $($net$)964,000594,000$

Land $626,000140,000$

Total assets $ $3,631,000$ $ $1,604,000$

Liabilities $ $(1,010,500)$ $ $(956,500)$

Common stock $(900,000)(300,000)$

Retained earnings $(1,720,500)(347,500)$

Total liabilities and equity $ $(3,631,000)$ $ $(1,604,000)$

Required:

Determine the December $31,2024,$ consolidated balance for each of the following accounts:

Depreciation Expense

Dividends Declared

Revenues

Equipment

Buildings

Goodwill

Common Stock

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

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

What would be Investment income if each of the following methods had been in use?

What would be Foxx$$s balance for retained earnings as of January $1,2024,$ if each of the following methods had been in use?

Initial value method.

Partial equity method.

Equity method.

Answer rating: 100% (QA)

To determine the December 31 2024 consolidated balance for each of the following accounts a Depreciation Expense The consolidated depreciation expense will be the sum of Foxx Corporations and Greenbur... View the full answer