In: Accounting
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $599,000 in cash. Annual excess amortization of $17,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $486,000, and Rambis reported a $220,000 balance. Herbert reported internal net income of $41,000 in 2020 and $55,600 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $27,500 in 2020 and $42,100 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.
Amounts | |
Consolidated retained earnings (equity method) | |
Consolidated retained earnings (initial value method) | |
Consolidated retained earnings (partial equity methdo) |
b. Under each of the following situations, what is the Investment in Rambis account balance on Herbert’s books on January 1, 2021?
Investment | |
Equity method | |
Partial equity method | |
Initial value method |
c. Under each of the following situations, what is Entry *C on a 2021 consolidation worksheet?