What are the consolidated retained earnings

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Question

Smith Inc. acquired all of the common stock that was outstanding of Williams Company on 1/1/15. As a result of this acquisition, there will be annual amortization in the amount of $30,000.

Smith reported a retained earnings balance of $400,000, and Williams reported a retained earnings balance of $100,000 on the date of acquisition. In addition, Smith had net income for 2015 in the amount of $75,000 and net income for 2016 in the amount of $70,000. Smith also paid dividends in the amount of $20,000 both in 2015 and 2016.

Williams had net income for 2015 in the amount of $25,000 and net income for 2016 in the amount of $30,000. In addition, Williams paid dividends in the amount of $5,000 both in 2015 and 2016.

Assume that Smith includes the Equity in Subsidiary income in their reported net income. If Smith uses the partial equity method for net income, what are the consolidated retained earnings on 12/31/16?

Reference no: EM132354284

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