Equity in subsidiary income


Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2009. Annual amortization of $22,000 resulted from this transaction. On the date of the takeover, Fesler reported retained earnings of $520,000 while Pickett reported a $240,000 balance. Fesler reported net income of $100,000 in 2009 and $68,000 in 20010 and paid dividends of $25,000 in dividends each year. Pickett reported net income of $24,000 in 2009 and $36,000 in 2010 and paid dividends of $10,000 in dividends each year.

Assume that Fesler's reported net income includes Equity in Subsidiary Income.

Required:

1. If the parent's net income reflected use of the equity method, what were the consolidated retained earnings on December 31, 2010?

2. If the parent's net income reflected use of the partial equity method, what were the consolidated retained earnings on December 31, 2010?

3. If the parent's net income reflected use of the initial value method, what were the consolidated retained earnings on December 31, 2010?

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Accounting Basics: Equity in subsidiary income
Reference No:- TGS076810

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