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Adams Inc acquires Clay Corporation on January 1 2017 in exchange for $510000 cash Immediately after the acquisition the two companies have the following account balances Clay s equipment

Adams, Inc., acquires Clay Corporation on January 1, 2017, in exchange for $510,000 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 $440,000. Credit balances are indicated by parentheses. _____________________________________________ Adams ____________ Clay Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000 . . . . . . . . $ 220,000 Investment in Clay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000 . . . . . . . . . . . . . -0- Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 . . . . . . . . . . . 390,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (200,000) . . . . . . . . . (160,000) Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (350,000) . . . . . . . . . (150,000) Retained earnings, 1/1/17 . . . . . . . . . . . . . . . . . . . . . . . . (860,000) . . . . . . . . .(300,000) In 2017, Clay earns a net income of $55,000 and declares and pays a $5,000 cash dividend. In 2017, Adams reports net income from its own operations (exclusive of any income from Clay) of $125,000 and declares no dividends. At the end of 2018, selected account balances for the two companies are as follows: __________________________________________________ Adams __________ Clay Revenues . . . . . . . . . .

Jul 15 2020 View more View Less

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