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Problem $3-22($Algo$)($LO $3-3$a$,3-3$b$,3-4)$

Adams, Incorporated, acquires Clay Corporation on January $1,2023,$ in exchange for $$518,300$ cash. Immediately after the acquisition, the two companies have the following account balances. Clay$$s equipment $($with a five$-$year remaining life$)$ is actually worth $$490,100.$ Credit balances are indicated by parentheses.

Items Adams Clay

Current assets $ $452,000$ $ $254,000$

Investment in Clay $518,3000$

Equipment $712,100422,000$

Liabilities $(246,000)(230,000)$

Common stock $(350,000)(150,000)$

Retained earnings, $1/1/23(1,086,400)(296,000)$

In $2023,$ Clay earns a net income of $$65,400$ and declares and pays a $$5,000$ cash dividend. In $2023,$ Adams reports net income from its own operations $($exclusive of any income from Clay$)$ of $$127,000$ and declares no dividends. At the end of $2024,$ selected account balances for the two companies are as follows:

$\backslash$table$[[$Revenues$,$Adams,Clay$],[$Expenses$,$$$(472,000),$$$(402,000)],[$Investment income,$342,200,301,500],[$Retained earnings, $1/1/24,$Not given,$0],[$Dividends declared,Not given,$(356,400)],[$Common stock,$0,8,000],[$Current assets,$(350,000),(150,000)],[$Investment in Clay,$736,000,321,500],[$Equipment$,$Not given,$0],[$Liabilities$,599,100,481,400],[,(180,300),(189,500)]]$

Required:

What are the December $31,2024,$ Investment Income and Investment in Clay account balances assuming Adams uses the:

Equity method.

Initial value method.

What is the amount of Consolidated Expenses in its December $31,2024,$ consolidated income statement under each of the following methods?

What is the amount of Consolidated Equipment in its December $31,2024,$ consolidated balance sheet under each of the following methods?

What is Adams$$s January $1,2024,$ Retained Earnings account balance assuming Adams accounts for its investment in Clay using the:

Equity value method.

Initial value method.

What worksheet adjustment to Adams$$s January $1,2024,$ Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method?

Prepare the worksheet entry to eliminate Clay$$s stockholders$$ equity.

What is consolidated net income for $2024?$

What are the December $31,2024,$ Investment Income and Inves

Equity method.

Initial value method.