What is the solution to this problem? Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2014, for $616,000 in cash. Annual ex amortization of $18,200 results from this transaction. On the date of the takeover, Herbert reported retained earnings $494,000, and Rambis reported a $272,000 balance. Herbert reported internal net income of $60,750 in 2014 and $72,450 in 2015 and declared $10,000 in dividends each year. Rambis reported net income of $27,000 in 2014 and $38,700 in 2015 and declared $5,000 in dividends each year. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. a- 1. a- 2. b. C. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2015? What would be the amount of consolidated retained earnings on December 31, 2015, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Under each of the following situations, what is the Investment in Rambis account balance on Herbert's books on January 1, 2015? Prepare entry *C for each of the following methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
What is the solution to this problem? Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2014, for $616,000 in cash. Annual ex amortization of $18,200 results from this transaction. On the date of the takeover, Herbert reported retained earnings $494,000, and Rambis reported a $272,000 balance. Herbert reported internal net income of $60,750 in 2014 and $72,450 in 2015 and declared $10,000 in dividends each year. Rambis reported net income of $27,000 in 2014 and $38,700 in 2015 and declared $5,000 in dividends each year. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. a- 1. a- 2. b. C. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2015? What would be the amount of consolidated retained earnings on December 31, 2015, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Under each of the following situations, what is the Investment in Rambis account balance on Herbert's books on January 1, 2015? Prepare entry *C for each of the following methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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D1.
Account
Transcribed Image Text:What is the solution to this problem?
Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2014, for $616,000 in cash. Annual excess
amortization of $18,200 results from this transaction. On the date of the takeover, Herbert reported retained earnings of
$494,000, and Rambis reported a $272,000 balance. Herbert reported internal net income of $60,750 in 2014 and
$72,450 in 2015 and declared $10,000 in dividends each year. Rambis reported net income of $27,000 in 2014 and
$38,700 in 2015 and declared $5,000 in dividends each year.
Assume that Herbert's internal net income figures above do not include any
income from the subsidiary.
a-
1.
a-
2.
b.
C.
If the parent uses the equity method, what is the amount reported as
consolidated retained earnings on December 31, 2015?
What would be the amount of consolidated retained earnings on
December 31, 2015, if the parent had applied either the initial value or
partial equity method for internal accounting purposes?
Under each of the following situations, what is the Investment in Rambis
account balance on Herbert's books on January 1, 2015?
Prepare entry *C for each of the following methods. (If no entry is required
for a transaction/event, select "No journal entry required" in the first
account field.)
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