Working backward to consolidation relations. Laesch Company, as parent, owns shares in Lily Company. Laesch has owned

Question:

Working backward to consolidation relations. Laesch Company, as parent, owns shares in Lily Company. Laesch has owned the shares since it formed Lily. Lily has never declared a dividend. Laesch has retained earnings from its own Operations independent of inter-corporate investments of $100,000. The consolidated shows no and shows retained earnings of $156,000. Consider each of the following questions independently of the others:
a. If Laesch owns 80% of Lily, its consolidated subsidiary, what are the retained earnings of the subsidiary?
b. If Lily has retained earnings of $77,000, what fraction of Lily does Laesch own?
c. If Laesch had not consolidated Lily but instead had accounted for it using the equity method, how much revenue would Laesch have recognized from the investment?

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