Question

Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $642,000 in cash. Annual excess amortization of $11,200 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $497,000, and Rambis reported a $280,000 balance. Herbert reported internal net income of $54,750 in 2020 and $68,650 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $21,300 in 2020 and $35,200 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. • If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? • What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is the Investment in Rambis account balance on Herbert's books on January 1, 2021? • The parent uses the equity method. • The parent uses the partial equity method. • The parent uses the initial value method. c. Under each of the following situations, what is Entry *C on a 2021 consolidation worksheet? • The parent uses the equity method. • The parent uses the partial equity method. • The parent uses the initial value method.

Answer 1

634,500 Consolidaded Related Earnings Equity Molled Particular Amount (3) 499,000 Herbert ( Paruud bal :) 1/4/20 51,752 Herbeut ducomo 2020 (lo, 000) Herbert dividend - 2020 21,300 Rambo Incomo-20201 not include in cazund.com (11/2001 amoulischen_2020 68 650 Hebeurt encore pour L10000) Herbert Dividend 2021 Rombis income ೩೩... 35,200 Amelizaten Qgog! (11,2002 Consolidbeben scolained causings 12/31/204 quitial Value Method Parital sanity Method and Consolidated Relained Earwiga Ceo the regarding of method i'n The beginning Bali the income hoes the dividend of the parent & the income of Subudiarey amortization Expense. Then Dec. 2021 consolidated Retourned Szening are $634,500 which are shown above or in bs Investment in Rombes - Equity Melland Particular Andy Rambis fare Value 1/1/20 $6427000 Rombis Income 2020 21,300 Rambes Dividends ondo (5,000) Hesebert's 9090 excess for over book Ilese amortizatén (44200) Investment Alc Bal. 1/1/21 $647,100 Equity Method

Investment in Rombes Partial Equity Halland Ant (1) Rambus 'fan Value 1/1/20 162,00 Rambis income 2010. 21,300 Rambis dividendi 9020 (5enn) Ivalment All Bal. 111121 1 658,30 Iu Investment in Rambis - Indeal Value Method Rochicular Amount (1) Raimbis yada Value_14120 $ 642,000 Inreshment Alc Bali 14/24 $ 642,000 C.. Equity Method No entory is needed Partial Equady method Amnatization for the prior years or 2020 has not been recorded amortization in consoliblated figures és Ently en recognise Retarised kontings Initial Value Method Amoufization of the pouleur years har hok lees recorded but dividend income has been record by the parent Company Rambis reported net Income Parent has scored the income ta excen & dilbank Entry c Sab Date -Account Debit caudet Luton 2021 No Joumal entry sequered Hon. 2001 Relarked earnings. Te Investment in Rambu's 14200 3. Jan 1, 2021 Investment in Rambis 5,100 To Rebied Enowing 5,100 Note ( 21,300-5000)=1643.00 -112.00 and not . ܚܩܩܐܨܐܐ DELTA Netshoek